Correlation Between MC Mining and Coronation Smaller

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

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

Diversification Opportunities for MC Mining and Coronation Smaller

-0.67

Correlation Coefficient

MC Mining  Coronation Smaller

Excellent diversification

The 3 months correlation between MCZ and Coronation is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding MC Mining and Coronation Smaller Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coronation Smaller and MC 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 MC Mining are associated (or correlated) with Coronation Smaller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coronation Smaller has no effect on the direction of MC Mining i.e., MC Mining and Coronation Smaller go up and down completely randomly.

Pair Corralation between MC Mining and Coronation Smaller

Assuming the 90 days trading horizon MC Mining is expected to under-perform the Coronation Smaller. In addition to that, MC Mining is 8.4 times more volatile than Coronation Smaller Companies. It trades about -0.01 of its total potential returns per unit of risk. Coronation Smaller Companies is currently generating about 0.1 per unit of volatility. If you would invest  10,009  in Coronation Smaller Companies on October 7, 2024 and sell it today you would earn a total of  3,705  from holding Coronation Smaller Companies or generate 37.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.59%
Values	Daily Returns

MC Mining  vs.  Coronation Smaller Companies

MC Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MC Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, MC Mining is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Coronation Smaller

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Smaller Companies are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong basic indicators, Coronation Smaller is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with MC Mining and Coronation Smaller

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

The idea behind MC Mining and Coronation Smaller Companies 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .