Correlation Between MC Mining and Vodacom

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

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

Diversification Opportunities for MC Mining and Vodacom

0.09

Correlation Coefficient

MC Mining  Vodacom

Significant diversification

The 3 months correlation between MCZ and Vodacom is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding MC Mining and Vodacom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodacom Group 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 Vodacom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodacom Group has no effect on the direction of MC Mining i.e., MC Mining and Vodacom go up and down completely randomly.

Pair Corralation between MC Mining and Vodacom

Assuming the 90 days trading horizon MC Mining is expected to generate 3.08 times more return on investment than Vodacom. However, MC Mining is 3.08 times more volatile than Vodacom Group. It trades about 0.23 of its potential returns per unit of risk. Vodacom Group is currently generating about -0.12 per unit of risk. If you would invest  14,500  in MC Mining on October 10, 2024 and sell it today you would earn a total of  2,400  from holding MC Mining or generate 16.55% return on investment over 90 days.

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

MC Mining  vs.  Vodacom Group

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.

Vodacom Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with MC Mining and Vodacom

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

The idea behind MC Mining and Vodacom Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..