Correlation Between Macmahon Holdings and Vendetta Mining

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

Diversification Opportunities for Macmahon Holdings and Vendetta Mining

0.35

Correlation Coefficient

Macmahon Holdings  Vendetta Mining

Weak diversification

The 3 months correlation between Macmahon and Vendetta is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Macmahon Holdings Limited and Vendetta Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vendetta Mining Corp 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 Vendetta Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vendetta Mining Corp has no effect on the direction of Macmahon Holdings i.e., Macmahon Holdings and Vendetta Mining go up and down completely randomly.

Pair Corralation between Macmahon Holdings and Vendetta Mining

Assuming the 90 days horizon Macmahon Holdings Limited is expected to under-perform the Vendetta Mining. But the pink sheet apears to be less risky and, when comparing its historical volatility, Macmahon Holdings Limited is 12.66 times less risky than Vendetta Mining. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Vendetta Mining Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.86  in Vendetta Mining Corp on December 30, 2024 and sell it today you would earn a total of  0.64  from holding Vendetta Mining Corp or generate 74.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Macmahon Holdings Limited  vs.  Vendetta Mining Corp

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.

Vendetta Mining Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vendetta Mining Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Vendetta Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Macmahon Holdings and Vendetta Mining

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

The idea behind Macmahon Holdings Limited and Vendetta Mining Corp 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.