Correlation Between Monument Mining and Tesla

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

Diversification Opportunities for Monument Mining and Tesla

-0.42

Correlation Coefficient

Monument Mining  Tesla

Very good diversification

The 3 months correlation between Monument and Tesla is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Monument Mining Limited and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc 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 Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of Monument Mining i.e., Monument Mining and Tesla go up and down completely randomly.

Pair Corralation between Monument Mining and Tesla

Assuming the 90 days trading horizon Monument Mining Limited is expected to generate 1.24 times more return on investment than Tesla. However, Monument Mining is 1.24 times more volatile than Tesla Inc. It trades about 0.16 of its potential returns per unit of risk. Tesla Inc is currently generating about -0.24 per unit of risk. If you would invest  18.00  in Monument Mining Limited on December 24, 2024 and sell it today you would earn a total of  9.00  from holding Monument Mining Limited or generate 50.0% return on investment over 90 days.

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

Monument Mining Limited  vs.  Tesla Inc

Monument Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monument Mining Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Monument Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Tesla Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tesla Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Monument Mining and Tesla

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

The idea behind Monument Mining Limited and Tesla Inc 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.