Correlation Between Mako Mining and AKITA Drilling

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

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

Diversification Opportunities for Mako Mining and AKITA Drilling

0.57

Correlation Coefficient

Mako Mining  AKITA Drilling

Very weak diversification

The 3 months correlation between Mako and AKITA is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Mako Mining Corp and AKITA Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKITA Drilling and Mako 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 Mako Mining Corp are associated (or correlated) with AKITA Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKITA Drilling has no effect on the direction of Mako Mining i.e., Mako Mining and AKITA Drilling go up and down completely randomly.

Pair Corralation between Mako Mining and AKITA Drilling

Assuming the 90 days horizon Mako Mining Corp is expected to generate 1.42 times more return on investment than AKITA Drilling. However, Mako Mining is 1.42 times more volatile than AKITA Drilling. It trades about 0.05 of its potential returns per unit of risk. AKITA Drilling is currently generating about 0.01 per unit of risk. If you would invest  190.00  in Mako Mining Corp on October 26, 2024 and sell it today you would earn a total of  188.00  from holding Mako Mining Corp or generate 98.95% return on investment over 90 days.

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

Mako Mining Corp  vs.  AKITA Drilling

Mako Mining Corp

Risk-Adjusted Performance

9 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mako Mining Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Mako Mining showed solid returns over the last few months and may actually be approaching a breakup point.

AKITA Drilling

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AKITA Drilling are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, AKITA Drilling is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Mako Mining and AKITA Drilling

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

The idea behind Mako Mining Corp and AKITA Drilling 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.