Correlation Between M3 Mining and Global Health

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

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

Diversification Opportunities for M3 Mining and Global Health

0.49

Correlation Coefficient

M3 Mining  Global Health

Very weak diversification

The 3 months correlation between M3M and Global is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding M3 Mining and Global Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Health 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 Global Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Health has no effect on the direction of M3 Mining i.e., M3 Mining and Global Health go up and down completely randomly.

Pair Corralation between M3 Mining and Global Health

Assuming the 90 days trading horizon M3 Mining is expected to generate 4.42 times less return on investment than Global Health. In addition to that, M3 Mining is 1.49 times more volatile than Global Health. It trades about 0.02 of its total potential returns per unit of risk. Global Health is currently generating about 0.14 per unit of volatility. If you would invest  13.00  in Global Health on September 18, 2024 and sell it today you would earn a total of  1.00  from holding Global Health or generate 7.69% 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.  Global Health

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 latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Global Health

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Health are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, Global Health 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 Global Health

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

The idea behind M3 Mining and Global Health 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.