Correlation Between Mantengu Mining and Wesizwe

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

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

Diversification Opportunities for Mantengu Mining and Wesizwe

0.37

Correlation Coefficient

Mantengu Mining  Wesizwe

Weak diversification

The 3 months correlation between Mantengu and Wesizwe is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Mantengu Mining and Wesizwe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesizwe 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 Wesizwe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesizwe has no effect on the direction of Mantengu Mining i.e., Mantengu Mining and Wesizwe go up and down completely randomly.

Pair Corralation between Mantengu Mining and Wesizwe

Assuming the 90 days trading horizon Mantengu Mining is expected to generate 2.01 times more return on investment than Wesizwe. However, Mantengu Mining is 2.01 times more volatile than Wesizwe. It trades about 0.06 of its potential returns per unit of risk. Wesizwe is currently generating about 0.01 per unit of risk. If you would invest  6,000  in Mantengu Mining on September 25, 2024 and sell it today you would earn a total of  1,000.00  from holding Mantengu Mining or generate 16.67% return on investment over 90 days.

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

Mantengu Mining  vs.  Wesizwe

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.

Wesizwe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wesizwe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Mantengu Mining and Wesizwe

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

The idea behind Mantengu Mining and Wesizwe 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..