Correlation Between Macmahon Holdings and Kootenay Silver

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

Diversification Opportunities for Macmahon Holdings and Kootenay Silver

0.55

Correlation Coefficient

Macmahon Holdings  Kootenay Silver

Very weak diversification

The 3 months correlation between Macmahon and Kootenay is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Macmahon Holdings Limited and Kootenay Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kootenay Silver 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 Kootenay Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kootenay Silver has no effect on the direction of Macmahon Holdings i.e., Macmahon Holdings and Kootenay Silver go up and down completely randomly.

Pair Corralation between Macmahon Holdings and Kootenay Silver

Assuming the 90 days horizon Macmahon Holdings Limited is expected to generate 0.71 times more return on investment than Kootenay Silver. However, Macmahon Holdings Limited is 1.4 times less risky than Kootenay Silver. It trades about 0.07 of its potential returns per unit of risk. Kootenay Silver is currently generating about 0.01 per unit of risk. If you would invest  17.00  in Macmahon Holdings Limited on October 7, 2024 and sell it today you would earn a total of  5.00  from holding Macmahon Holdings Limited or generate 29.41% return on investment over 90 days.

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

Macmahon Holdings Limited  vs.  Kootenay Silver

Macmahon Holdings

Risk-Adjusted Performance

0 of 100

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 weak 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.

Kootenay Silver

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Macmahon Holdings and Kootenay Silver

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

The idea behind Macmahon Holdings Limited and Kootenay Silver 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.