Correlation Between Financial and Mako Mining

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

By analyzing existing cross correlation between Financial 15 Split and Mako Mining Corp, you can compare the effects of market volatilities on Financial 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 Financial with a short position of Mako Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and Mako Mining.

Diversification Opportunities for Financial and Mako Mining

-0.52

Correlation Coefficient

Financial  Mako Mining

Excellent diversification

The 3 months correlation between Financial and Mako is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split 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 Financial 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 Financial 15 Split 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 Financial i.e., Financial and Mako Mining go up and down completely randomly.

Pair Corralation between Financial and Mako Mining

Assuming the 90 days trading horizon Financial is expected to generate 2.1 times less return on investment than Mako Mining. But when comparing it to its historical volatility, Financial 15 Split is 10.78 times less risky than Mako Mining. It trades about 0.31 of its potential returns per unit of risk. Mako Mining Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  308.00  in Mako Mining Corp on October 5, 2024 and sell it today you would earn a total of  27.00  from holding Mako Mining Corp or generate 8.77% return on investment over 90 days.

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

Financial 15 Split  vs.  Mako Mining Corp

Financial 15 Split

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Financial 15 Split are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mako Mining Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mako Mining Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Mako Mining may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Financial and Mako Mining

The main advantage of trading using opposite Financial and Mako Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial 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 Financial 15 Split 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.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.