Correlation Between Monument Mining and Lomiko Metals

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

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

Diversification Opportunities for Monument Mining and Lomiko Metals

-0.34

Correlation Coefficient

Monument Mining  Lomiko Metals

Very good diversification

The 3 months correlation between Monument and Lomiko is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Monument Mining Limited and Lomiko Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lomiko Metals and Monument 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 Monument Mining Limited are associated (or correlated) with Lomiko Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lomiko Metals has no effect on the direction of Monument Mining i.e., Monument Mining and Lomiko Metals go up and down completely randomly.

Pair Corralation between Monument Mining and Lomiko Metals

Assuming the 90 days horizon Monument Mining Limited is expected to generate 0.72 times more return on investment than Lomiko Metals. However, Monument Mining Limited is 1.4 times less risky than Lomiko Metals. It trades about 0.35 of its potential returns per unit of risk. Lomiko Metals is currently generating about -0.06 per unit of risk. If you would invest  28.00  in Monument Mining Limited on October 24, 2024 and sell it today you would earn a total of  7.00  from holding Monument Mining Limited or generate 25.0% return on investment over 90 days.

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

Monument Mining Limited  vs.  Lomiko Metals

Monument Mining

Risk-Adjusted Performance

8 of 100

OK

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

Lomiko Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lomiko Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Monument Mining and Lomiko Metals

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

The idea behind Monument Mining Limited and Lomiko Metals 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.