Correlation Between Monument Mining and Alphabet

Can any of the company-specific risk be diversified away by investing in both Monument Mining and Alphabet 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 Alphabet 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 Alphabet Class A, you can compare the effects of market volatilities on Monument Mining and Alphabet 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 Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monument Mining and Alphabet.

Diversification Opportunities for Monument Mining and Alphabet

0.52

Correlation Coefficient

Monument Mining  Alphabet

Very weak diversification

The 3 months correlation between Monument and Alphabet is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Monument Mining Limited and Alphabet Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet Class A 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 Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet Class A has no effect on the direction of Monument Mining i.e., Monument Mining and Alphabet go up and down completely randomly.

Pair Corralation between Monument Mining and Alphabet

Assuming the 90 days trading horizon Monument Mining Limited is expected to under-perform the Alphabet. In addition to that, Monument Mining is 2.4 times more volatile than Alphabet Class A. It trades about -0.01 of its total potential returns per unit of risk. Alphabet Class A is currently generating about 0.17 per unit of volatility. If you would invest  16,663  in Alphabet Class A on October 9, 2024 and sell it today you would earn a total of  1,921  from holding Alphabet Class A or generate 11.53% return on investment over 90 days.

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

Monument Mining Limited  vs.  Alphabet Class A

Monument Mining

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Monument Mining Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Monument Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Alphabet Class A

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Class A are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Alphabet exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monument Mining and Alphabet

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

The idea behind Monument Mining Limited and Alphabet Class A 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.