Correlation Between MAGNUM MINING and IDP EDUCATION

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

By analyzing existing cross correlation between MAGNUM MINING EXP and IDP EDUCATION LTD, you can compare the effects of market volatilities on MAGNUM MINING and IDP EDUCATION 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 MAGNUM MINING with a short position of IDP EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGNUM MINING and IDP EDUCATION.

Diversification Opportunities for MAGNUM MINING and IDP EDUCATION

0.51

Correlation Coefficient

MAGNUM MINING  IDP EDUCATION

Very weak diversification

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

Pair Corralation between MAGNUM MINING and IDP EDUCATION

Assuming the 90 days trading horizon MAGNUM MINING EXP is expected to under-perform the IDP EDUCATION. But the stock apears to be less risky and, when comparing its historical volatility, MAGNUM MINING EXP is 1.54 times less risky than IDP EDUCATION. The stock trades about -0.13 of its potential returns per unit of risk. The IDP EDUCATION LTD is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  659.00  in IDP EDUCATION LTD on December 20, 2024 and sell it today you would lose (74.00) from holding IDP EDUCATION LTD or give up 11.23% of portfolio value over 90 days.

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

MAGNUM MINING EXP  vs.  IDP EDUCATION LTD

MAGNUM MINING EXP

Risk-Adjusted Performance

Very Weak

Over the last 90 days MAGNUM MINING EXP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

IDP EDUCATION LTD

Risk-Adjusted Performance

Very Weak

Over the last 90 days IDP EDUCATION LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, IDP EDUCATION is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MAGNUM MINING and IDP EDUCATION

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

The idea behind MAGNUM MINING EXP and IDP EDUCATION LTD 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.