Correlation Between Monument Mining and Norden Crown

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

Diversification Opportunities for Monument Mining and Norden Crown

-0.33

Correlation Coefficient

Monument Mining  Norden Crown

Very good diversification

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

Pair Corralation between Monument Mining and Norden Crown

Assuming the 90 days horizon Monument Mining Limited is expected to generate 0.52 times more return on investment than Norden Crown. However, Monument Mining Limited is 1.94 times less risky than Norden Crown. It trades about 0.09 of its potential returns per unit of risk. Norden Crown Metals is currently generating about 0.02 per unit of risk. If you would invest  28.00  in Monument Mining Limited on October 23, 2024 and sell it today you would earn a total of  5.00  from holding Monument Mining Limited or generate 17.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Monument Mining Limited  vs.  Norden Crown Metals

Monument Mining

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Monument Mining Limited are ranked lower than 6 (%) 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.

Norden Crown Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Norden Crown Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Norden Crown may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Monument Mining and Norden Crown

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

The idea behind Monument Mining Limited and Norden Crown 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.