Correlation Between New Destiny and Mkango Resources

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

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

Diversification Opportunities for New Destiny and Mkango Resources

0.12

Correlation Coefficient

New Destiny  Mkango Resources

Average diversification

The 3 months correlation between New and Mkango is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding New Destiny Mining and Mkango Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mkango Resources and New Destiny 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 New Destiny Mining are associated (or correlated) with Mkango Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mkango Resources has no effect on the direction of New Destiny i.e., New Destiny and Mkango Resources go up and down completely randomly.

Pair Corralation between New Destiny and Mkango Resources

Assuming the 90 days horizon New Destiny Mining is expected to generate 1.7 times more return on investment than Mkango Resources. However, New Destiny is 1.7 times more volatile than Mkango Resources. It trades about 0.12 of its potential returns per unit of risk. Mkango Resources is currently generating about 0.09 per unit of risk. If you would invest  3.00  in New Destiny Mining on December 20, 2024 and sell it today you would earn a total of  2.00  from holding New Destiny Mining or generate 66.67% return on investment over 90 days.

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

New Destiny Mining  vs.  Mkango Resources

New Destiny Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in New Destiny Mining are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, New Destiny showed solid returns over the last few months and may actually be approaching a breakup point.

Mkango Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mkango Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Mkango Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with New Destiny and Mkango Resources

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

The idea behind New Destiny Mining and Mkango Resources 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.