Correlation Between Mako Mining and Medical Facilities

Can any of the company-specific risk be diversified away by investing in both Mako Mining and Medical Facilities 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 Medical Facilities 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 Medical Facilities, you can compare the effects of market volatilities on Mako Mining and Medical Facilities 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 Medical Facilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mako Mining and Medical Facilities.

Diversification Opportunities for Mako Mining and Medical Facilities

0.82

Correlation Coefficient

Mako Mining  Medical Facilities

Very poor diversification

The 3 months correlation between Mako and Medical is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Mako Mining Corp and Medical Facilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Facilities 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 Medical Facilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Facilities has no effect on the direction of Mako Mining i.e., Mako Mining and Medical Facilities go up and down completely randomly.

Pair Corralation between Mako Mining and Medical Facilities

Assuming the 90 days horizon Mako Mining Corp is expected to generate 2.0 times more return on investment than Medical Facilities. However, Mako Mining is 2.0 times more volatile than Medical Facilities. It trades about 0.15 of its potential returns per unit of risk. Medical Facilities is currently generating about 0.14 per unit of risk. If you would invest  306.00  in Mako Mining Corp on November 28, 2024 and sell it today you would earn a total of  89.00  from holding Mako Mining Corp or generate 29.08% return on investment over 90 days.

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

Mako Mining Corp  vs.  Medical Facilities

Mako Mining Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mako Mining Corp are ranked lower than 11 (%) 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.

Medical Facilities

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Facilities are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Medical Facilities displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mako Mining and Medical Facilities

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

The idea behind Mako Mining Corp and Medical Facilities 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.