Correlation Between HMS Bergbau and MC Mining

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

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

Diversification Opportunities for HMS Bergbau and MC Mining

-0.2

Correlation Coefficient

HMS Bergbau  MC Mining

Good diversification

The 3 months correlation between HMS and G1V is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding HMS Bergbau AG and MC Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MC Mining and HMS Bergbau 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 HMS Bergbau AG are associated (or correlated) with MC Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MC Mining has no effect on the direction of HMS Bergbau i.e., HMS Bergbau and MC Mining go up and down completely randomly.

Pair Corralation between HMS Bergbau and MC Mining

Assuming the 90 days trading horizon HMS Bergbau is expected to generate 102.64 times less return on investment than MC Mining. But when comparing it to its historical volatility, HMS Bergbau AG is 121.86 times less risky than MC Mining. It trades about 0.13 of its potential returns per unit of risk. MC Mining is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  5.95  in MC Mining on October 12, 2024 and sell it today you would lose (5.80) from holding MC Mining or give up 97.48% of portfolio value over 90 days.

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

HMS Bergbau AG  vs.  MC Mining

HMS Bergbau AG

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HMS Bergbau AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, HMS Bergbau is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

MC Mining

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MC Mining are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MC Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HMS Bergbau and MC Mining

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

The idea behind HMS Bergbau AG and MC Mining 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.

Check out your portfolio center.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.