Correlation Between Manila Mining and Medco Holdings
Can any of the company-specific risk be diversified away by investing in both Manila Mining and Medco Holdings 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 Manila Mining and Medco Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manila Mining Corp and Medco Holdings, you can compare the effects of market volatilities on Manila Mining and Medco Holdings 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 Manila Mining with a short position of Medco Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manila Mining and Medco Holdings.
Diversification Opportunities for Manila Mining and Medco Holdings
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Manila and Medco is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Manila Mining Corp and Medco Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medco Holdings and Manila 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 Manila Mining Corp are associated (or correlated) with Medco Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medco Holdings has no effect on the direction of Manila Mining i.e., Manila Mining and Medco Holdings go up and down completely randomly.
Pair Corralation between Manila Mining and Medco Holdings
Assuming the 90 days trading horizon Manila Mining Corp is expected to under-perform the Medco Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Manila Mining Corp is 2.4 times less risky than Medco Holdings. The stock trades about -0.13 of its potential returns per unit of risk. The Medco Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Medco Holdings on September 24, 2024 and sell it today you would lose (2.00) from holding Medco Holdings or give up 14.29% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 83.5% |
Values | Daily Returns |
Manila Mining Corp vs. Medco Holdings
Performance |
Timeline |
Manila Mining Corp |
Medco Holdings |
Manila Mining and Medco Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Manila Mining and Medco Holdings
The main advantage of trading using opposite Manila Mining and Medco Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manila Mining position performs unexpectedly, Medco Holdings 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 Medco Holdings will offset losses from the drop in Medco Holdings' long position.Manila Mining vs. Nickel Asia Corp | Manila Mining vs. Apollo Global Capital | Manila Mining vs. Atok Big Wedge | Manila Mining vs. Philex Mining Corp |
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Check out your portfolio center.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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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