Correlation Between Mako Mining and Puma Exploration

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

Diversification Opportunities for Mako Mining and Puma Exploration

0.16

Correlation Coefficient

Mako Mining  Puma Exploration

Average diversification

The 3 months correlation between Mako and Puma is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Mako Mining Corp and Puma Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puma Exploration 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 Puma Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Puma Exploration has no effect on the direction of Mako Mining i.e., Mako Mining and Puma Exploration go up and down completely randomly.

Pair Corralation between Mako Mining and Puma Exploration

Assuming the 90 days horizon Mako Mining Corp is expected to generate 0.37 times more return on investment than Puma Exploration. However, Mako Mining Corp is 2.74 times less risky than Puma Exploration. It trades about 0.14 of its potential returns per unit of risk. Puma Exploration is currently generating about 0.05 per unit of risk. If you would invest  218.00  in Mako Mining Corp on November 29, 2024 and sell it today you would earn a total of  60.00  from holding Mako Mining Corp or generate 27.52% return on investment over 90 days.

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

Mako Mining Corp  vs.  Puma Exploration

Mako Mining Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mako Mining Corp are ranked lower than 10 (%) 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.

Puma Exploration

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Puma Exploration are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Puma Exploration reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mako Mining and Puma Exploration

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

The idea behind Mako Mining Corp and Puma Exploration 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.