Correlation Between Mantle Minerals and K2 Asset

Can any of the company-specific risk be diversified away by investing in both Mantle Minerals and K2 Asset 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 Mantle Minerals and K2 Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mantle Minerals Limited and K2 Asset Management, you can compare the effects of market volatilities on Mantle Minerals and K2 Asset 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 Mantle Minerals with a short position of K2 Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mantle Minerals and K2 Asset.

Diversification Opportunities for Mantle Minerals and K2 Asset

-0.47

Correlation Coefficient

Mantle Minerals  K2 Asset

Very good diversification

The 3 months correlation between Mantle and KAM is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Mantle Minerals Limited and K2 Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K2 Asset Management and Mantle Minerals 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 Mantle Minerals Limited are associated (or correlated) with K2 Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K2 Asset Management has no effect on the direction of Mantle Minerals i.e., Mantle Minerals and K2 Asset go up and down completely randomly.

Pair Corralation between Mantle Minerals and K2 Asset

Assuming the 90 days trading horizon Mantle Minerals Limited is expected to generate 6.75 times more return on investment than K2 Asset. However, Mantle Minerals is 6.75 times more volatile than K2 Asset Management. It trades about 0.09 of its potential returns per unit of risk. K2 Asset Management is currently generating about 0.21 per unit of risk. If you would invest  0.15  in Mantle Minerals Limited on September 12, 2024 and sell it today you would lose (0.05) from holding Mantle Minerals Limited or give up 33.33% of portfolio value over 90 days.

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

Mantle Minerals Limited  vs.  K2 Asset Management

Mantle Minerals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mantle Minerals Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Mantle Minerals unveiled solid returns over the last few months and may actually be approaching a breakup point.

K2 Asset Management

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in K2 Asset Management are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, K2 Asset unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mantle Minerals and K2 Asset

The main advantage of trading using opposite Mantle Minerals and K2 Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mantle Minerals position performs unexpectedly, K2 Asset 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 K2 Asset will offset losses from the drop in K2 Asset's long position.

The idea behind Mantle Minerals Limited and K2 Asset Management 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.