Correlation Between Macmahon Holdings and Altiplano Metals

Can any of the company-specific risk be diversified away by investing in both Macmahon Holdings and Altiplano Metals 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 Macmahon Holdings and Altiplano Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Macmahon Holdings Limited and Altiplano Metals, you can compare the effects of market volatilities on Macmahon Holdings and Altiplano Metals 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 Macmahon Holdings with a short position of Altiplano Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macmahon Holdings and Altiplano Metals.

Diversification Opportunities for Macmahon Holdings and Altiplano Metals

-0.13

Correlation Coefficient

Macmahon Holdings  Altiplano Metals

Good diversification

The 3 months correlation between Macmahon and Altiplano is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Macmahon Holdings Limited and Altiplano Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altiplano Metals and Macmahon Holdings 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 Macmahon Holdings Limited are associated (or correlated) with Altiplano Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altiplano Metals has no effect on the direction of Macmahon Holdings i.e., Macmahon Holdings and Altiplano Metals go up and down completely randomly.

Pair Corralation between Macmahon Holdings and Altiplano Metals

Assuming the 90 days horizon Macmahon Holdings Limited is expected to under-perform the Altiplano Metals. But the pink sheet apears to be less risky and, when comparing its historical volatility, Macmahon Holdings Limited is 6.49 times less risky than Altiplano Metals. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Altiplano Metals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3.50  in Altiplano Metals on December 30, 2024 and sell it today you would earn a total of  0.60  from holding Altiplano Metals or generate 17.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Macmahon Holdings Limited  vs.  Altiplano Metals

Macmahon Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Macmahon Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Altiplano Metals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Altiplano Metals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Altiplano Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Macmahon Holdings and Altiplano Metals

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

The idea behind Macmahon Holdings Limited and Altiplano Metals 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.