Correlation Between MAGNUM MINING and Varta AG

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

Diversification Opportunities for MAGNUM MINING and Varta AG

0.3

Correlation Coefficient

MAGNUM MINING  Varta AG

Weak diversification

The 3 months correlation between MAGNUM and Varta is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding MAGNUM MINING EXP and Varta AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varta AG 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 Varta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varta AG has no effect on the direction of MAGNUM MINING i.e., MAGNUM MINING and Varta AG go up and down completely randomly.

Pair Corralation between MAGNUM MINING and Varta AG

Assuming the 90 days trading horizon MAGNUM MINING EXP is expected to under-perform the Varta AG. But the stock apears to be less risky and, when comparing its historical volatility, MAGNUM MINING EXP is 4.71 times less risky than Varta AG. The stock trades about -0.13 of its potential returns per unit of risk. The Varta AG is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  152.00  in Varta AG on December 21, 2024 and sell it today you would lose (30.00) from holding Varta AG or give up 19.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.53%
Values	Daily Returns

MAGNUM MINING EXP  vs.  Varta AG

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 fragile 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.

Varta AG

Risk-Adjusted Performance

Insignificant

Over the last 90 days Varta AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Varta AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MAGNUM MINING and Varta AG

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

The idea behind MAGNUM MINING EXP and Varta AG 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 Stocks Directory module to find actively traded stocks across global markets.