Correlation Between Midnight Sun and Mkango Resources

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

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

Diversification Opportunities for Midnight Sun and Mkango Resources

0.18

Correlation Coefficient

Midnight Sun  Mkango Resources

Average diversification

The 3 months correlation between Midnight and Mkango is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Midnight Sun Mining and Mkango Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mkango Resources and Midnight Sun 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 Midnight Sun Mining are associated (or correlated) with Mkango Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mkango Resources has no effect on the direction of Midnight Sun i.e., Midnight Sun and Mkango Resources go up and down completely randomly.

Pair Corralation between Midnight Sun and Mkango Resources

Assuming the 90 days horizon Midnight Sun Mining is expected to generate 0.94 times more return on investment than Mkango Resources. However, Midnight Sun Mining is 1.07 times less risky than Mkango Resources. It trades about 0.06 of its potential returns per unit of risk. Mkango Resources is currently generating about 0.03 per unit of risk. If you would invest  23.00  in Midnight Sun Mining on October 9, 2024 and sell it today you would earn a total of  40.00  from holding Midnight Sun Mining or generate 173.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Midnight Sun Mining  vs.  Mkango Resources

Midnight Sun Mining

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Midnight Sun Mining are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Midnight Sun showed solid returns over the last few months and may actually be approaching a breakup point.

Mkango Resources

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Midnight Sun and Mkango Resources

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

The idea behind Midnight Sun Mining and Mkango Resources 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.