Correlation Between Mining Global and New World

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

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

Diversification Opportunities for Mining Global and New World

0.02

Correlation Coefficient

Mining Global  New World

Significant diversification

The 3 months correlation between Mining and New is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Mining Global and New World Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New World Gold and Mining Global 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 Mining Global are associated (or correlated) with New World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New World Gold has no effect on the direction of Mining Global i.e., Mining Global and New World go up and down completely randomly.

Pair Corralation between Mining Global and New World

If you would invest  0.01  in New World Gold on December 27, 2024 and sell it today you would earn a total of  0.00  from holding New World Gold or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Mining Global  vs.  New World Gold

Mining Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mining Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Mining Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

New World Gold

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in New World Gold are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, New World exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mining Global and New World

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

The idea behind Mining Global and New World Gold 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.