Correlation Between Mantengu Mining and South32

Can any of the company-specific risk be diversified away by investing in both Mantengu Mining and South32 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 Mantengu Mining and South32 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mantengu Mining and South32, you can compare the effects of market volatilities on Mantengu Mining and South32 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 Mantengu Mining with a short position of South32. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mantengu Mining and South32.

Diversification Opportunities for Mantengu Mining and South32

0.1

Correlation Coefficient

Mantengu Mining  South32

Average diversification

The 3 months correlation between Mantengu and South32 is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Mantengu Mining and South32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South32 and Mantengu Mining 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 Mantengu Mining are associated (or correlated) with South32. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South32 has no effect on the direction of Mantengu Mining i.e., Mantengu Mining and South32 go up and down completely randomly.

Pair Corralation between Mantengu Mining and South32

Assuming the 90 days trading horizon Mantengu Mining is expected to under-perform the South32. In addition to that, Mantengu Mining is 3.32 times more volatile than South32. It trades about -0.04 of its total potential returns per unit of risk. South32 is currently generating about -0.04 per unit of volatility. If you would invest  454,600  in South32 on September 25, 2024 and sell it today you would lose (64,600) from holding South32 or give up 14.21% of portfolio value over 90 days.

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

Mantengu Mining  vs.  South32

Mantengu Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mantengu Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Mantengu Mining is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

South32

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days South32 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, South32 is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Mantengu Mining and South32

The main advantage of trading using opposite Mantengu Mining and South32 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mantengu Mining position performs unexpectedly, South32 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 South32 will offset losses from the drop in South32's long position.

The idea behind Mantengu Mining and South32 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 Commodity Directory module to find actively traded commodities issued by global exchanges.