Correlation Between M3 Mining and Collins Foods

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

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

Diversification Opportunities for M3 Mining and Collins Foods

0.51

Correlation Coefficient

M3 Mining  Collins Foods

Very weak diversification

The 3 months correlation between M3M and Collins is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding M3 Mining and Collins Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collins Foods 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 Collins Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collins Foods has no effect on the direction of M3 Mining i.e., M3 Mining and Collins Foods go up and down completely randomly.

Pair Corralation between M3 Mining and Collins Foods

Assuming the 90 days trading horizon M3 Mining is expected to generate 1.92 times less return on investment than Collins Foods. In addition to that, M3 Mining is 3.36 times more volatile than Collins Foods. It trades about 0.02 of its total potential returns per unit of risk. Collins Foods is currently generating about 0.14 per unit of volatility. If you would invest  826.00  in Collins Foods on December 10, 2024 and sell it today you would earn a total of  34.00  from holding Collins Foods or generate 4.12% return on investment over 90 days.

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

M3 Mining  vs.  Collins Foods

M3 Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in M3 Mining are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, M3 Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Collins Foods

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Collins Foods are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Collins Foods may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with M3 Mining and Collins Foods

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

The idea behind M3 Mining and Collins Foods 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 Stocks Directory module to find actively traded stocks across global markets.