Correlation Between MC Mining and Investec

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

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

Diversification Opportunities for MC Mining and Investec

0.14

Correlation Coefficient

MC Mining  Investec

Average diversification

The 3 months correlation between MCZ and Investec is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding MC Mining and Investec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec 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 Investec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec has no effect on the direction of MC Mining i.e., MC Mining and Investec go up and down completely randomly.

Pair Corralation between MC Mining and Investec

Assuming the 90 days trading horizon MC Mining is expected to under-perform the Investec. In addition to that, MC Mining is 3.07 times more volatile than Investec. It trades about -0.03 of its total potential returns per unit of risk. Investec is currently generating about -0.02 per unit of volatility. If you would invest  1,286,454  in Investec on September 26, 2024 and sell it today you would lose (31,454) from holding Investec or give up 2.45% of portfolio value over 90 days.

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

MC Mining  vs.  Investec

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 latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Investec

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with MC Mining and Investec

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

The idea behind MC Mining and Investec 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.