Correlation Between Metals Exploration and Mahindra Mahindra

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

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

Diversification Opportunities for Metals Exploration and Mahindra Mahindra

-0.39

Correlation Coefficient

Metals Exploration  Mahindra Mahindra

Very good diversification

The 3 months correlation between Metals and Mahindra is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Metals Exploration Plc and Mahindra Mahindra Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mahindra Mahindra and Metals Exploration 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 Metals Exploration Plc are associated (or correlated) with Mahindra Mahindra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mahindra Mahindra has no effect on the direction of Metals Exploration i.e., Metals Exploration and Mahindra Mahindra go up and down completely randomly.

Pair Corralation between Metals Exploration and Mahindra Mahindra

Assuming the 90 days trading horizon Metals Exploration Plc is expected to generate 1.63 times more return on investment than Mahindra Mahindra. However, Metals Exploration is 1.63 times more volatile than Mahindra Mahindra Limited. It trades about 0.02 of its potential returns per unit of risk. Mahindra Mahindra Limited is currently generating about -0.12 per unit of risk. If you would invest  550.00  in Metals Exploration Plc on December 4, 2024 and sell it today you would earn a total of  0.00  from holding Metals Exploration Plc or generate 0.0% return on investment over 90 days.

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

Metals Exploration Plc  vs.  Mahindra Mahindra Limited

Metals Exploration Plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Metals Exploration Plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Metals Exploration is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Mahindra Mahindra

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mahindra Mahindra Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Metals Exploration and Mahindra Mahindra

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

The idea behind Metals Exploration Plc and Mahindra Mahindra Limited 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .