Correlation Between M3 Mining and Chalice Mining

Can any of the company-specific risk be diversified away by investing in both M3 Mining and Chalice 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 M3 Mining and Chalice Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between M3 Mining and Chalice Mining Limited, you can compare the effects of market volatilities on M3 Mining and Chalice 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 M3 Mining with a short position of Chalice Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of M3 Mining and Chalice Mining.

Diversification Opportunities for M3 Mining and Chalice Mining

0.56

Correlation Coefficient

M3 Mining  Chalice Mining

Very weak diversification

The 3 months correlation between M3M and Chalice is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding M3 Mining and Chalice Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chalice Mining and M3 Mining 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 M3 Mining are associated (or correlated) with Chalice Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chalice Mining has no effect on the direction of M3 Mining i.e., M3 Mining and Chalice Mining go up and down completely randomly.

Pair Corralation between M3 Mining and Chalice Mining

Assuming the 90 days trading horizon M3 Mining is expected to generate 1.04 times more return on investment than Chalice Mining. However, M3 Mining is 1.04 times more volatile than Chalice Mining Limited. It trades about -0.03 of its potential returns per unit of risk. Chalice Mining Limited is currently generating about -0.05 per unit of risk. If you would invest  13.00  in M3 Mining on September 17, 2024 and sell it today you would lose (9.60) from holding M3 Mining or give up 73.85% of portfolio value over 90 days.

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

M3 Mining  vs.  Chalice Mining Limited

M3 Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days M3 Mining 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 primary indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Chalice Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chalice Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Chalice Mining is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with M3 Mining and Chalice Mining

The main advantage of trading using opposite M3 Mining and Chalice Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M3 Mining position performs unexpectedly, Chalice 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 Chalice Mining will offset losses from the drop in Chalice Mining's long position.

The idea behind M3 Mining and Chalice 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.