Correlation Between Mundoro Capital and Monument Mining

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

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

Diversification Opportunities for Mundoro Capital and Monument Mining

-0.31

Correlation Coefficient

Mundoro Capital  Monument Mining

Very good diversification

The 3 months correlation between Mundoro and Monument is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Mundoro Capital and Monument Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monument Mining and Mundoro Capital 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 Mundoro Capital are associated (or correlated) with Monument Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monument Mining has no effect on the direction of Mundoro Capital i.e., Mundoro Capital and Monument Mining go up and down completely randomly.

Pair Corralation between Mundoro Capital and Monument Mining

Assuming the 90 days horizon Mundoro Capital is expected to under-perform the Monument Mining. But the stock apears to be less risky and, when comparing its historical volatility, Mundoro Capital is 1.53 times less risky than Monument Mining. The stock trades about -0.12 of its potential returns per unit of risk. The Monument Mining Limited is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  28.00  in Monument Mining Limited on October 24, 2024 and sell it today you would earn a total of  7.00  from holding Monument Mining Limited or generate 25.0% return on investment over 90 days.

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

Mundoro Capital  vs.  Monument Mining Limited

Mundoro Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mundoro Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Monument Mining

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monument Mining Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Monument Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mundoro Capital and Monument Mining

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

The idea behind Mundoro Capital and Monument Mining 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.