Correlation Between Komatsu and MINCO SILVER

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

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

Diversification Opportunities for Komatsu and MINCO SILVER

0.3

Correlation Coefficient

Komatsu  MINCO SILVER

Weak diversification

The 3 months correlation between Komatsu and MINCO is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Komatsu and MINCO SILVER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MINCO SILVER and Komatsu 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 Komatsu are associated (or correlated) with MINCO SILVER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MINCO SILVER has no effect on the direction of Komatsu i.e., Komatsu and MINCO SILVER go up and down completely randomly.

Pair Corralation between Komatsu and MINCO SILVER

Assuming the 90 days trading horizon Komatsu is expected to generate 2.94 times less return on investment than MINCO SILVER. But when comparing it to its historical volatility, Komatsu is 2.31 times less risky than MINCO SILVER. It trades about 0.09 of its potential returns per unit of risk. MINCO SILVER is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  10.00  in MINCO SILVER on September 14, 2024 and sell it today you would earn a total of  3.00  from holding MINCO SILVER or generate 30.0% return on investment over 90 days.

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

Komatsu  vs.  MINCO SILVER

Komatsu

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Komatsu are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain primary indicators, Komatsu may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MINCO SILVER

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MINCO SILVER are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, MINCO SILVER unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Komatsu and MINCO SILVER

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

The idea behind Komatsu and MINCO SILVER 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.