Correlation Between Helios Fairfax and Monument Mining

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

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

Diversification Opportunities for Helios Fairfax and Monument Mining

-0.61

Correlation Coefficient

Helios Fairfax  Monument Mining

Excellent diversification

The 3 months correlation between Helios and Monument is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Helios Fairfax Partners and Monument Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monument Mining and Helios Fairfax 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 Helios Fairfax Partners are associated (or correlated) with Monument Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monument Mining has no effect on the direction of Helios Fairfax i.e., Helios Fairfax and Monument Mining go up and down completely randomly.

Pair Corralation between Helios Fairfax and Monument Mining

Assuming the 90 days trading horizon Helios Fairfax Partners is expected to under-perform the Monument Mining. In addition to that, Helios Fairfax is 2.09 times more volatile than Monument Mining Limited. It trades about -0.09 of its total potential returns per unit of risk. Monument Mining Limited is currently generating about 0.32 per unit of volatility. If you would invest  27.00  in Monument Mining Limited on October 20, 2024 and sell it today you would earn a total of  6.00  from holding Monument Mining Limited or generate 22.22% return on investment over 90 days.

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

Helios Fairfax Partners  vs.  Monument Mining Limited

Helios Fairfax Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Helios Fairfax Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Monument Mining

Risk-Adjusted Performance

9 of 100

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. In spite of fairly abnormal basic indicators, Monument Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Helios Fairfax and Monument Mining

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

The idea behind Helios Fairfax Partners and Monument Mining Limited 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.