Correlation Between Nampak and MC Mining
Can any of the company-specific risk be diversified away by investing in both Nampak and MC 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 Nampak and MC Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nampak and MC Mining, you can compare the effects of market volatilities on Nampak and MC 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 Nampak with a short position of MC Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nampak and MC Mining.
Diversification Opportunities for Nampak and MC Mining
Good diversification
The 3 months correlation between Nampak and MCZ is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Nampak and MC Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MC Mining and Nampak 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 Nampak are associated (or correlated) with MC Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MC Mining has no effect on the direction of Nampak i.e., Nampak and MC Mining go up and down completely randomly.
Pair Corralation between Nampak and MC Mining
Assuming the 90 days trading horizon Nampak is expected to under-perform the MC Mining. But the stock apears to be less risky and, when comparing its historical volatility, Nampak is 2.01 times less risky than MC Mining. The stock trades about -0.03 of its potential returns per unit of risk. The MC Mining is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 14,500 in MC Mining on October 7, 2024 and sell it today you would earn a total of 2,400 from holding MC Mining or generate 16.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 94.44% |
Values | Daily Returns |
Nampak vs. MC Mining
Performance |
Timeline |
Nampak |
MC Mining |
Nampak and MC Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nampak and MC Mining
The main advantage of trading using opposite Nampak and MC Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nampak position performs unexpectedly, MC 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 MC Mining will offset losses from the drop in MC Mining's long position.Nampak vs. Sasol Ltd Bee | Nampak vs. Centaur Bci Balanced | Nampak vs. Sabvest Capital | Nampak vs. Growthpoint Properties |
MC Mining vs. Exxaro Resources | MC Mining vs. Thungela Resources Limited | MC Mining vs. Sasol Ltd Bee | MC Mining vs. Sabvest Capital |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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