Correlation Between Mako Mining and Connecticut Light

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

By analyzing existing cross correlation between Mako Mining Corp and The Connecticut Light, you can compare the effects of market volatilities on Mako Mining and Connecticut Light 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 Mako Mining with a short position of Connecticut Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mako Mining and Connecticut Light.

Diversification Opportunities for Mako Mining and Connecticut Light

0.31

Correlation Coefficient

Mako Mining  Connecticut Light

Weak diversification

The 3 months correlation between Mako and Connecticut is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Mako Mining Corp and The Connecticut Light in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Connecticut Light and Mako 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 Mako Mining Corp are associated (or correlated) with Connecticut Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Connecticut Light has no effect on the direction of Mako Mining i.e., Mako Mining and Connecticut Light go up and down completely randomly.

Pair Corralation between Mako Mining and Connecticut Light

Assuming the 90 days horizon Mako Mining Corp is expected to generate 2.06 times more return on investment than Connecticut Light. However, Mako Mining is 2.06 times more volatile than The Connecticut Light. It trades about 0.04 of its potential returns per unit of risk. The Connecticut Light is currently generating about -0.07 per unit of risk. If you would invest  225.00  in Mako Mining Corp on October 26, 2024 and sell it today you would earn a total of  11.00  from holding Mako Mining Corp or generate 4.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Mako Mining Corp  vs.  The Connecticut Light

Mako Mining Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mako Mining Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Mako Mining may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Connecticut Light

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Connecticut Light has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Mako Mining and Connecticut Light

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

The idea behind Mako Mining Corp and The Connecticut Light 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.