Correlation Between M3 Mining and Ora Banda

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

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

Diversification Opportunities for M3 Mining and Ora Banda

0.49

Correlation Coefficient

M3 Mining  Ora Banda

Very weak diversification

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

Pair Corralation between M3 Mining and Ora Banda

Assuming the 90 days trading horizon M3 Mining is expected to generate 2.18 times less return on investment than Ora Banda. In addition to that, M3 Mining is 1.45 times more volatile than Ora Banda Mining. It trades about 0.07 of its total potential returns per unit of risk. Ora Banda Mining is currently generating about 0.21 per unit of volatility. If you would invest  68.00  in Ora Banda Mining on December 28, 2024 and sell it today you would earn a total of  38.00  from holding Ora Banda Mining or generate 55.88% 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.  Ora Banda Mining

M3 Mining

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in M3 Mining are ranked lower than 5 (%) 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.

Ora Banda Mining

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ora Banda Mining are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Ora Banda unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with M3 Mining and Ora Banda

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

The idea behind M3 Mining and Ora Banda Mining 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.