Correlation Between Mining Global and Rackla Metals

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

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

Diversification Opportunities for Mining Global and Rackla Metals

0.0

Correlation Coefficient

Mining Global  Rackla Metals

Pay attention - limited upside

The 3 months correlation between Mining and Rackla is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mining Global and Rackla Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rackla Metals 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 Rackla Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rackla Metals has no effect on the direction of Mining Global i.e., Mining Global and Rackla Metals go up and down completely randomly.

Pair Corralation between Mining Global and Rackla Metals

Given the investment horizon of 90 days Mining Global is expected to generate 3.38 times more return on investment than Rackla Metals. However, Mining Global is 3.38 times more volatile than Rackla Metals. It trades about 0.12 of its potential returns per unit of risk. Rackla Metals is currently generating about 0.12 per unit of risk. If you would invest  0.01  in Mining Global on December 1, 2024 and sell it today you would earn a total of  0.00  from holding Mining Global or generate 0.0% return on investment over 90 days.

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

Mining Global  vs.  Rackla Metals

Mining Global

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mining Global are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Mining Global reported solid returns over the last few months and may actually be approaching a breakup point.

Rackla Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rackla Metals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Rackla Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mining Global and Rackla Metals

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

The idea behind Mining Global and Rackla 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..