Correlation Between GoldMining and Mundoro Capital

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

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

Diversification Opportunities for GoldMining and Mundoro Capital

0.14

Correlation Coefficient

GoldMining  Mundoro Capital

Average diversification

The 3 months correlation between GoldMining and Mundoro is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Mundoro Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mundoro Capital and GoldMining 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 GoldMining are associated (or correlated) with Mundoro Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mundoro Capital has no effect on the direction of GoldMining i.e., GoldMining and Mundoro Capital go up and down completely randomly.

Pair Corralation between GoldMining and Mundoro Capital

Assuming the 90 days trading horizon GoldMining is expected to generate 0.78 times more return on investment than Mundoro Capital. However, GoldMining is 1.28 times less risky than Mundoro Capital. It trades about 0.03 of its potential returns per unit of risk. Mundoro Capital is currently generating about 0.02 per unit of risk. If you would invest  88.00  in GoldMining on October 9, 2024 and sell it today you would earn a total of  28.00  from holding GoldMining or generate 31.82% return on investment over 90 days.

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

GoldMining  vs.  Mundoro Capital

GoldMining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GoldMining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, GoldMining is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Mundoro Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mundoro Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Mundoro Capital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with GoldMining and Mundoro Capital

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

The idea behind GoldMining and Mundoro Capital 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.