Correlation Between MAGNUM MINING and GREENLIGHT CAP

Can any of the company-specific risk be diversified away by investing in both MAGNUM MINING and GREENLIGHT CAP 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 GREENLIGHT CAP 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 GREENLIGHT CAP RE, you can compare the effects of market volatilities on MAGNUM MINING and GREENLIGHT CAP 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 GREENLIGHT CAP. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGNUM MINING and GREENLIGHT CAP.

Diversification Opportunities for MAGNUM MINING and GREENLIGHT CAP

0.73

Correlation Coefficient

MAGNUM MINING  GREENLIGHT CAP

Poor diversification

The 3 months correlation between MAGNUM and GREENLIGHT is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding MAGNUM MINING EXP and GREENLIGHT CAP RE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREENLIGHT CAP RE 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 GREENLIGHT CAP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREENLIGHT CAP RE has no effect on the direction of MAGNUM MINING i.e., MAGNUM MINING and GREENLIGHT CAP go up and down completely randomly.

Pair Corralation between MAGNUM MINING and GREENLIGHT CAP

Assuming the 90 days trading horizon MAGNUM MINING EXP is expected to under-perform the GREENLIGHT CAP. In addition to that, MAGNUM MINING is 2.22 times more volatile than GREENLIGHT CAP RE. It trades about -0.13 of its total potential returns per unit of risk. GREENLIGHT CAP RE is currently generating about -0.07 per unit of volatility. If you would invest  1,320  in GREENLIGHT CAP RE on December 23, 2024 and sell it today you would lose (90.00) from holding GREENLIGHT CAP RE or give up 6.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

MAGNUM MINING EXP  vs.  GREENLIGHT CAP RE

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 uncertain 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.

GREENLIGHT CAP RE

Risk-Adjusted Performance

Very Weak

Over the last 90 days GREENLIGHT CAP RE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with MAGNUM MINING and GREENLIGHT CAP

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

The idea behind MAGNUM MINING EXP and GREENLIGHT CAP RE 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.