Correlation Between Metalero Mining and Magna Mining

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

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

Diversification Opportunities for Metalero Mining and Magna Mining

-0.33

Correlation Coefficient

Metalero Mining  Magna Mining

Very good diversification

The 3 months correlation between Metalero and Magna is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Metalero Mining Corp and Magna Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna Mining and Metalero 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 Metalero Mining Corp are associated (or correlated) with Magna Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna Mining has no effect on the direction of Metalero Mining i.e., Metalero Mining and Magna Mining go up and down completely randomly.

Pair Corralation between Metalero Mining and Magna Mining

Assuming the 90 days horizon Metalero Mining is expected to generate 25.33 times less return on investment than Magna Mining. But when comparing it to its historical volatility, Metalero Mining Corp is 1.8 times less risky than Magna Mining. It trades about 0.01 of its potential returns per unit of risk. Magna Mining is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  69.00  in Magna Mining on October 22, 2024 and sell it today you would earn a total of  91.00  from holding Magna Mining or generate 131.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.31%
Values	Daily Returns

Metalero Mining Corp  vs.  Magna Mining

Metalero Mining Corp

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Metalero Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Metalero Mining may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Magna Mining

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Magna Mining are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Magna Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metalero Mining and Magna Mining

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

The idea behind Metalero Mining Corp and Magna 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.