Correlation Between MC Mining and Sun International

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

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

Diversification Opportunities for MC Mining and Sun International

0.54

Correlation Coefficient

MC Mining  Sun International

Very weak diversification

The 3 months correlation between MCZ and Sun is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding MC Mining and Sun International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun International 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 Sun International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun International has no effect on the direction of MC Mining i.e., MC Mining and Sun International go up and down completely randomly.

Pair Corralation between MC Mining and Sun International

Assuming the 90 days trading horizon MC Mining is expected to under-perform the Sun International. In addition to that, MC Mining is 4.78 times more volatile than Sun International. It trades about -0.04 of its total potential returns per unit of risk. Sun International is currently generating about -0.04 per unit of volatility. If you would invest  435,000  in Sun International on December 19, 2024 and sell it today you would lose (22,700) from holding Sun International or give up 5.22% of portfolio value over 90 days.

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

MC Mining  vs.  Sun International

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 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 April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Sun International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Sun International 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 Sun International

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

The idea behind MC Mining and Sun International 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.