Correlation Between Connecticut Light and Mako Mining

Can any of the company-specific risk be diversified away by investing in both Connecticut Light and Mako Mining at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Connecticut Light and Mako Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Connecticut Light and Mako Mining Corp, you can compare the effects of market volatilities on Connecticut Light and Mako Mining and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Connecticut Light with a short position of Mako Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Connecticut Light and Mako Mining.

Diversification Opportunities for Connecticut Light and Mako Mining

0.31

Correlation Coefficient

Connecticut Light  Mako Mining

Weak diversification

The 3 months correlation between Connecticut and Mako is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding The Connecticut Light and Mako Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mako Mining Corp and Connecticut Light is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on The Connecticut Light are associated (or correlated) with Mako Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mako Mining Corp has no effect on the direction of Connecticut Light i.e., Connecticut Light and Mako Mining go up and down completely randomly.

Pair Corralation between Connecticut Light and Mako Mining

Assuming the 90 days horizon The Connecticut Light is expected to under-perform the Mako Mining. But the pink sheet apears to be less risky and, when comparing its historical volatility, The Connecticut Light is 2.06 times less risky than Mako Mining. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Mako Mining Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  225.00  in Mako Mining Corp on October 26, 2024 and sell it today you would earn a total of  11.00  from holding Mako Mining Corp or generate 4.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

The Connecticut Light  vs.  Mako Mining Corp

Connecticut Light

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Connecticut Light has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Mako Mining Corp

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mako Mining Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Mako Mining may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Connecticut Light and Mako Mining

The main advantage of trading using opposite Connecticut Light and Mako Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Connecticut Light position performs unexpectedly, Mako Mining can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Mako Mining will offset losses from the drop in Mako Mining's long position.

The idea behind The Connecticut Light and Mako Mining Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.