Correlation Between MMEX Resources and Parafin Corp

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

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

Diversification Opportunities for MMEX Resources and Parafin Corp

0.1

Correlation Coefficient

MMEX Resources  Parafin Corp

Average diversification

The 3 months correlation between MMEX and Parafin is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding MMEX Resources Corp and Parafin Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parafin Corp and MMEX Resources 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 MMEX Resources Corp are associated (or correlated) with Parafin Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parafin Corp has no effect on the direction of MMEX Resources i.e., MMEX Resources and Parafin Corp go up and down completely randomly.

Pair Corralation between MMEX Resources and Parafin Corp

Given the investment horizon of 90 days MMEX Resources Corp is expected to generate 14.98 times more return on investment than Parafin Corp. However, MMEX Resources is 14.98 times more volatile than Parafin Corp. It trades about 0.21 of its potential returns per unit of risk. Parafin Corp is currently generating about 0.02 per unit of risk. If you would invest  2.30  in MMEX Resources Corp on September 12, 2024 and sell it today you would lose (2.30) from holding MMEX Resources Corp or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.13%
Values	Daily Returns

MMEX Resources Corp  vs.  Parafin Corp

MMEX Resources Corp

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MMEX Resources Corp are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, MMEX Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Parafin Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Parafin Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Parafin Corp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with MMEX Resources and Parafin Corp

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

The idea behind MMEX Resources Corp and Parafin Corp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.