Correlation Between Matador Mining and Collective Mining

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

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

Diversification Opportunities for Matador Mining and Collective Mining

-0.42

Correlation Coefficient

Matador Mining  Collective Mining

Very good diversification

The 3 months correlation between Matador and Collective is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Matador Mining Limited and Collective Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collective Mining and Matador 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 Matador Mining Limited are associated (or correlated) with Collective Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collective Mining has no effect on the direction of Matador Mining i.e., Matador Mining and Collective Mining go up and down completely randomly.

Pair Corralation between Matador Mining and Collective Mining

If you would invest  317.00  in Collective Mining on September 1, 2024 and sell it today you would earn a total of  14.00  from holding Collective Mining or generate 4.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.35%
Values	Daily Returns

Matador Mining Limited  vs.  Collective Mining

Matador Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Matador Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Matador Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Collective Mining

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Collective Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile primary indicators, Collective Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Matador Mining and Collective Mining

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

The idea behind Matador Mining Limited and Collective Mining 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.