Correlation Between Converge Information and Manila Mining

Can any of the company-specific risk be diversified away by investing in both Converge Information and Manila 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 Converge Information and Manila Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Converge Information Communications and Manila Mining Corp, you can compare the effects of market volatilities on Converge Information and Manila 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 Converge Information with a short position of Manila Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Converge Information and Manila Mining.

Diversification Opportunities for Converge Information and Manila Mining

-0.47

Correlation Coefficient

Converge Information  Manila Mining

Very good diversification

The 3 months correlation between Converge and Manila is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Converge Information Communica and Manila Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manila Mining Corp and Converge Information 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 Converge Information Communications are associated (or correlated) with Manila Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manila Mining Corp has no effect on the direction of Converge Information i.e., Converge Information and Manila Mining go up and down completely randomly.

Pair Corralation between Converge Information and Manila Mining

Assuming the 90 days trading horizon Converge Information is expected to generate 2.89 times less return on investment than Manila Mining. But when comparing it to its historical volatility, Converge Information Communications is 2.23 times less risky than Manila Mining. It trades about 0.07 of its potential returns per unit of risk. Manila Mining Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.32  in Manila Mining Corp on November 19, 2024 and sell it today you would earn a total of  0.03  from holding Manila Mining Corp or generate 9.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	47.46%
Values	Daily Returns

Converge Information Communica  vs.  Manila Mining Corp

Converge Information

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Converge Information Communications are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Converge Information may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Manila Mining Corp

Risk-Adjusted Performance

OK

Over the last 90 days Manila Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady technical and fundamental indicators, Manila Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Converge Information and Manila Mining

The main advantage of trading using opposite Converge Information and Manila Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Converge Information position performs unexpectedly, Manila 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 Manila Mining will offset losses from the drop in Manila Mining's long position.

The idea behind Converge Information Communications and Manila 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.