Correlation Between NextSource Materials and Mako Mining

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

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

Diversification Opportunities for NextSource Materials and Mako Mining

-0.52

Correlation Coefficient

NextSource Materials  Mako Mining

Excellent diversification

The 3 months correlation between NextSource and Mako is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding NextSource Materials and Mako Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mako Mining Corp and NextSource Materials 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 NextSource Materials are associated (or correlated) with Mako Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mako Mining Corp has no effect on the direction of NextSource Materials i.e., NextSource Materials and Mako Mining go up and down completely randomly.

Pair Corralation between NextSource Materials and Mako Mining

Assuming the 90 days trading horizon NextSource Materials is expected to under-perform the Mako Mining. In addition to that, NextSource Materials is 1.69 times more volatile than Mako Mining Corp. It trades about -0.19 of its total potential returns per unit of risk. Mako Mining Corp is currently generating about 0.19 per unit of volatility. If you would invest  288.00  in Mako Mining Corp on December 22, 2024 and sell it today you would earn a total of  122.00  from holding Mako Mining Corp or generate 42.36% return on investment over 90 days.

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

NextSource Materials  vs.  Mako Mining Corp

NextSource Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days NextSource Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Mako Mining Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mako Mining Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Mako Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NextSource Materials and Mako Mining

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

The idea behind NextSource Materials and Mako Mining Corp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.