Correlation Between MC Mining and Deneb Investments

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

By analyzing existing cross correlation between MC Mining and Deneb Investments, you can compare the effects of market volatilities on MC Mining and Deneb Investments 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 Deneb Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of MC Mining and Deneb Investments.

Diversification Opportunities for MC Mining and Deneb Investments

-0.11

Correlation Coefficient

MC Mining  Deneb Investments

Good diversification

The 3 months correlation between MCZ and Deneb is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding MC Mining and Deneb Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deneb Investments 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 Deneb Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deneb Investments has no effect on the direction of MC Mining i.e., MC Mining and Deneb Investments go up and down completely randomly.

Pair Corralation between MC Mining and Deneb Investments

Assuming the 90 days trading horizon MC Mining is expected to under-perform the Deneb Investments. In addition to that, MC Mining is 4.31 times more volatile than Deneb Investments. It trades about -0.01 of its total potential returns per unit of risk. Deneb Investments is currently generating about 0.07 per unit of volatility. If you would invest  20,200  in Deneb Investments on December 29, 2024 and sell it today you would earn a total of  1,700  from holding Deneb Investments or generate 8.42% return on investment over 90 days.

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

MC Mining  vs.  Deneb Investments

MC Mining

Risk-Adjusted Performance

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.

Deneb Investments

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Deneb Investments are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Deneb Investments may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with MC Mining and Deneb Investments

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

The idea behind MC Mining and Deneb Investments 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.