Correlation Between Mako Mining and Neptune Digital

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

Diversification Opportunities for Mako Mining and Neptune Digital

0.61

Correlation Coefficient

Mako Mining  Neptune Digital

Poor diversification

The 3 months correlation between Mako and Neptune is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Mako Mining Corp and Neptune Digital Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neptune Digital Assets 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 Neptune Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neptune Digital Assets has no effect on the direction of Mako Mining i.e., Mako Mining and Neptune Digital go up and down completely randomly.

Pair Corralation between Mako Mining and Neptune Digital

Assuming the 90 days horizon Mako Mining is expected to generate 1.54 times less return on investment than Neptune Digital. But when comparing it to its historical volatility, Mako Mining Corp is 2.84 times less risky than Neptune Digital. It trades about 0.2 of its potential returns per unit of risk. Neptune Digital Assets is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  114.00  in Neptune Digital Assets on December 20, 2024 and sell it today you would earn a total of  51.00  from holding Neptune Digital Assets or generate 44.74% return on investment over 90 days.

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

Mako Mining Corp  vs.  Neptune Digital Assets

Mako Mining Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mako Mining Corp are ranked lower than 15 (%) 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.

Neptune Digital Assets

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Neptune Digital Assets are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Neptune Digital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mako Mining and Neptune Digital

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

The idea behind Mako Mining Corp and Neptune Digital Assets 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.