Correlation Between Made Tech and GoldMining

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

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

Diversification Opportunities for Made Tech and GoldMining

-0.03

Correlation Coefficient

Made Tech  GoldMining

Good diversification

The 3 months correlation between Made and GoldMining is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Made Tech Group and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining and Made Tech 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 Made Tech Group are associated (or correlated) with GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Made Tech i.e., Made Tech and GoldMining go up and down completely randomly.

Pair Corralation between Made Tech and GoldMining

Assuming the 90 days trading horizon Made Tech Group is expected to generate 1.37 times more return on investment than GoldMining. However, Made Tech is 1.37 times more volatile than GoldMining. It trades about 0.1 of its potential returns per unit of risk. GoldMining is currently generating about 0.02 per unit of risk. If you would invest  1,850  in Made Tech Group on September 2, 2024 and sell it today you would earn a total of  450.00  from holding Made Tech Group or generate 24.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.18%
Values	Daily Returns

Made Tech Group  vs.  GoldMining

Made Tech Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Made Tech Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Made Tech unveiled solid returns over the last few months and may actually be approaching a breakup point.

GoldMining

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GoldMining are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, GoldMining is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Made Tech and GoldMining

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

The idea behind Made Tech Group and GoldMining 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.