Correlation Between Monument Mining and Virtu Financial

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

By analyzing existing cross correlation between Monument Mining Limited and Virtu Financial, you can compare the effects of market volatilities on Monument Mining and Virtu Financial 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 Monument Mining with a short position of Virtu Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monument Mining and Virtu Financial.

Diversification Opportunities for Monument Mining and Virtu Financial

0.2

Correlation Coefficient

Monument Mining  Virtu Financial

Modest diversification

The 3 months correlation between Monument and Virtu is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Monument Mining Limited and Virtu Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtu Financial and Monument Mining 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 Monument Mining Limited are associated (or correlated) with Virtu Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtu Financial has no effect on the direction of Monument Mining i.e., Monument Mining and Virtu Financial go up and down completely randomly.

Pair Corralation between Monument Mining and Virtu Financial

Assuming the 90 days trading horizon Monument Mining Limited is expected to generate 2.34 times more return on investment than Virtu Financial. However, Monument Mining is 2.34 times more volatile than Virtu Financial. It trades about 0.12 of its potential returns per unit of risk. Virtu Financial is currently generating about 0.02 per unit of risk. If you would invest  19.00  in Monument Mining Limited on December 22, 2024 and sell it today you would earn a total of  6.00  from holding Monument Mining Limited or generate 31.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Monument Mining Limited  vs.  Virtu Financial

Monument Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monument Mining Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Monument Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Virtu Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Virtu Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Virtu Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Monument Mining and Virtu Financial

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

The idea behind Monument Mining Limited and Virtu Financial 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.