Correlation Between M3 Mining and Event Hospitality

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

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

Diversification Opportunities for M3 Mining and Event Hospitality

0.66

Correlation Coefficient

M3 Mining  Event Hospitality

Poor diversification

The 3 months correlation between M3M and Event is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding M3 Mining and Event Hospitality and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Event Hospitality 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 Event Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Event Hospitality has no effect on the direction of M3 Mining i.e., M3 Mining and Event Hospitality go up and down completely randomly.

Pair Corralation between M3 Mining and Event Hospitality

Assuming the 90 days trading horizon M3 Mining is expected to generate 2.21 times more return on investment than Event Hospitality. However, M3 Mining is 2.21 times more volatile than Event Hospitality and. It trades about 0.18 of its potential returns per unit of risk. Event Hospitality and is currently generating about 0.17 per unit of risk. If you would invest  3.50  in M3 Mining on November 28, 2024 and sell it today you would earn a total of  2.00  from holding M3 Mining or generate 57.14% return on investment over 90 days.

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

M3 Mining  vs.  Event Hospitality and

M3 Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in M3 Mining are ranked lower than 14 (%) 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.

Event Hospitality

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Event Hospitality and are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Event Hospitality unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with M3 Mining and Event Hospitality

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

The idea behind M3 Mining and Event Hospitality and 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.