Correlation Between Magna Mining and Computer Modelling

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

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

Diversification Opportunities for Magna Mining and Computer Modelling

-0.62

Correlation Coefficient

Magna Mining  Computer Modelling

Excellent diversification

The 3 months correlation between Magna and Computer is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Magna Mining and Computer Modelling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Modelling and Magna 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 Magna Mining are associated (or correlated) with Computer Modelling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Modelling has no effect on the direction of Magna Mining i.e., Magna Mining and Computer Modelling go up and down completely randomly.

Pair Corralation between Magna Mining and Computer Modelling

Assuming the 90 days trading horizon Magna Mining is expected to generate 7.56 times less return on investment than Computer Modelling. In addition to that, Magna Mining is 1.43 times more volatile than Computer Modelling Group. It trades about 0.01 of its total potential returns per unit of risk. Computer Modelling Group is currently generating about 0.06 per unit of volatility. If you would invest  1,030  in Computer Modelling Group on September 25, 2024 and sell it today you would earn a total of  23.00  from holding Computer Modelling Group or generate 2.23% return on investment over 90 days.

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

Magna Mining  vs.  Computer Modelling Group

Magna Mining

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Magna Mining are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Magna Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Computer Modelling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Computer Modelling Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Computer Modelling is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Magna Mining and Computer Modelling

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

The idea behind Magna Mining and Computer Modelling Group 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.