Correlation Between Mako Mining and Herc Holdings

Can any of the company-specific risk be diversified away by investing in both Mako Mining and Herc 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 Mako Mining and Herc Holdings 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 Herc Holdings, you can compare the effects of market volatilities on Mako Mining and Herc 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 Mako Mining with a short position of Herc Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mako Mining and Herc Holdings.

Diversification Opportunities for Mako Mining and Herc Holdings

-0.39

Correlation Coefficient

Mako Mining  Herc Holdings

Very good diversification

The 3 months correlation between Mako and Herc is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Mako Mining Corp and Herc Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herc Holdings 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 Herc Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herc Holdings has no effect on the direction of Mako Mining i.e., Mako Mining and Herc Holdings go up and down completely randomly.

Pair Corralation between Mako Mining and Herc Holdings

Assuming the 90 days horizon Mako Mining Corp is expected to generate 1.1 times more return on investment than Herc Holdings. However, Mako Mining is 1.1 times more volatile than Herc Holdings. It trades about 0.15 of its potential returns per unit of risk. Herc Holdings is currently generating about -0.19 per unit of risk. If you would invest  206.00  in Mako Mining Corp on December 17, 2024 and sell it today you would earn a total of  69.00  from holding Mako Mining Corp or generate 33.5% return on investment over 90 days.

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

Mako Mining Corp  vs.  Herc Holdings

Mako Mining Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mako Mining Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Mako Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Herc Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Herc Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Mako Mining and Herc Holdings

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

The idea behind Mako Mining Corp and Herc Holdings 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.