Correlation Between Mineral Res and Magna Mining

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

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

Diversification Opportunities for Mineral Res and Magna Mining

-0.28

Correlation Coefficient

Mineral Res  Magna Mining

Very good diversification

The 3 months correlation between Mineral and Magna is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Mineral Res and Magna Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna Mining and Mineral Res 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 Mineral Res are associated (or correlated) with Magna Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna Mining has no effect on the direction of Mineral Res i.e., Mineral Res and Magna Mining go up and down completely randomly.

Pair Corralation between Mineral Res and Magna Mining

Assuming the 90 days horizon Mineral Res is expected to under-perform the Magna Mining. In addition to that, Mineral Res is 1.17 times more volatile than Magna Mining. It trades about -0.19 of its total potential returns per unit of risk. Magna Mining is currently generating about 0.12 per unit of volatility. If you would invest  99.00  in Magna Mining on December 3, 2024 and sell it today you would earn a total of  17.00  from holding Magna Mining or generate 17.17% return on investment over 90 days.

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

Mineral Res  vs.  Magna Mining

Mineral Res

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mineral Res 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 fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Magna Mining

Risk-Adjusted Performance

Insignificant

Over the last 90 days Magna Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Magna Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mineral Res and Magna Mining

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

The idea behind Mineral Res and Magna Mining 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.