Correlation Between MTI INVESTMENT and MAGNUM MINING

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

By analyzing existing cross correlation between MTI INVESTMENT SE and MAGNUM MINING EXP, you can compare the effects of market volatilities on MTI INVESTMENT and MAGNUM 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 MTI INVESTMENT with a short position of MAGNUM MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTI INVESTMENT and MAGNUM MINING.

Diversification Opportunities for MTI INVESTMENT and MAGNUM MINING

-0.31

Correlation Coefficient

MTI INVESTMENT  MAGNUM MINING

Very good diversification

The 3 months correlation between MTI and MAGNUM is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding MTI INVESTMENT SE and MAGNUM MINING EXP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAGNUM MINING EXP and MTI INVESTMENT 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 MTI INVESTMENT SE are associated (or correlated) with MAGNUM MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAGNUM MINING EXP has no effect on the direction of MTI INVESTMENT i.e., MTI INVESTMENT and MAGNUM MINING go up and down completely randomly.

Pair Corralation between MTI INVESTMENT and MAGNUM MINING

Assuming the 90 days horizon MTI INVESTMENT SE is expected to generate 1.33 times more return on investment than MAGNUM MINING. However, MTI INVESTMENT is 1.33 times more volatile than MAGNUM MINING EXP. It trades about -0.09 of its potential returns per unit of risk. MAGNUM MINING EXP is currently generating about -0.13 per unit of risk. If you would invest  7.40  in MTI INVESTMENT SE on December 19, 2024 and sell it today you would lose (1.95) from holding MTI INVESTMENT SE or give up 26.35% of portfolio value over 90 days.

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

MTI INVESTMENT SE  vs.  MAGNUM MINING EXP

MTI INVESTMENT SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days MTI INVESTMENT SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

MAGNUM MINING EXP

Risk-Adjusted Performance

Very Weak

Over the last 90 days MAGNUM MINING EXP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with MTI INVESTMENT and MAGNUM MINING

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

The idea behind MTI INVESTMENT SE and MAGNUM MINING EXP 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.