Correlation Between MC Mining and Naspers

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

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

Diversification Opportunities for MC Mining and Naspers

-0.05

Correlation Coefficient

MC Mining  Naspers

Good diversification

The 3 months correlation between MCZ and Naspers is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding MC Mining and Naspers Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naspers Limited 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 Naspers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naspers Limited has no effect on the direction of MC Mining i.e., MC Mining and Naspers go up and down completely randomly.

Pair Corralation between MC Mining and Naspers

Assuming the 90 days trading horizon MC Mining is expected to under-perform the Naspers. In addition to that, MC Mining is 2.47 times more volatile than Naspers Limited. It trades about -0.01 of its total potential returns per unit of risk. Naspers Limited is currently generating about 0.02 per unit of volatility. If you would invest  33,840,900  in Naspers Limited on October 12, 2024 and sell it today you would earn a total of  2,688,300  from holding Naspers Limited or generate 7.94% 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.  Naspers Limited

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 unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Naspers Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Naspers Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with MC Mining and Naspers

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

The idea behind MC Mining and Naspers Limited 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..