Correlation Between MFF Capital and Aspire Mining

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

By analyzing existing cross correlation between MFF Capital Investments and Aspire Mining, you can compare the effects of market volatilities on MFF Capital and Aspire Mining 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 MFF Capital with a short position of Aspire Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFF Capital and Aspire Mining.

Diversification Opportunities for MFF Capital and Aspire Mining

-0.72

Correlation Coefficient

MFF Capital  Aspire Mining

Pay attention - limited upside

The 3 months correlation between MFF and Aspire is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding MFF Capital Investments and Aspire Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspire Mining and MFF Capital 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 MFF Capital Investments are associated (or correlated) with Aspire Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspire Mining has no effect on the direction of MFF Capital i.e., MFF Capital and Aspire Mining go up and down completely randomly.

Pair Corralation between MFF Capital and Aspire Mining

Assuming the 90 days trading horizon MFF Capital Investments is expected to generate 0.29 times more return on investment than Aspire Mining. However, MFF Capital Investments is 3.48 times less risky than Aspire Mining. It trades about 0.3 of its potential returns per unit of risk. Aspire Mining is currently generating about -0.07 per unit of risk. If you would invest  389.00  in MFF Capital Investments on October 23, 2024 and sell it today you would earn a total of  86.00  from holding MFF Capital Investments or generate 22.11% return on investment over 90 days.

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

MFF Capital Investments  vs.  Aspire Mining

MFF Capital Investments

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MFF Capital Investments are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, MFF Capital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Aspire Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aspire Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with MFF Capital and Aspire Mining

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

The idea behind MFF Capital Investments and Aspire Mining 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.