Correlation Between Sempra and MAGNUM MINING

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Can any of the company-specific risk be diversified away by investing in both Sempra and MAGNUM 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 Sempra and MAGNUM MINING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sempra and MAGNUM MINING EXP, you can compare the effects of market volatilities on Sempra and MAGNUM 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 Sempra with a short position of MAGNUM MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sempra and MAGNUM MINING.

Diversification Opportunities for Sempra and MAGNUM MINING

SempraMAGNUMDiversified AwaySempraMAGNUMDiversified Away100%
0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between Sempra and MAGNUM is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sempra and MAGNUM MINING EXP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAGNUM MINING EXP and Sempra 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 Sempra are associated (or correlated) with MAGNUM MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAGNUM MINING EXP has no effect on the direction of Sempra i.e., Sempra and MAGNUM MINING go up and down completely randomly.

Pair Corralation between Sempra and MAGNUM MINING

Assuming the 90 days horizon Sempra is expected to generate 0.51 times more return on investment than MAGNUM MINING. However, Sempra is 1.97 times less risky than MAGNUM MINING. It trades about -0.06 of its potential returns per unit of risk. MAGNUM MINING EXP is currently generating about -0.13 per unit of risk. If you would invest  8,640  in Sempra on November 18, 2024 and sell it today you would lose (580.00) from holding Sempra or give up 6.71% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.36%
ValuesDaily Returns

Sempra  vs.  MAGNUM MINING EXP

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510
JavaScript chart by amCharts 3.21.15SE4 M8Z
       Timeline  
Sempra 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Sempra has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sempra is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb7678808284868890
MAGNUM MINING EXP 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days MAGNUM MINING EXP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.0460.0480.050.0520.0540.0560.0580.06

Sempra and MAGNUM MINING Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.86-2.14-1.43-0.710.00.711.422.132.84 0.040.060.080.100.12
JavaScript chart by amCharts 3.21.15SE4 M8Z
       Returns  

Pair Trading with Sempra and MAGNUM MINING

The main advantage of trading using opposite Sempra and MAGNUM MINING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sempra position performs unexpectedly, MAGNUM 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 MAGNUM MINING will offset losses from the drop in MAGNUM MINING's long position.
The idea behind Sempra and MAGNUM MINING EXP 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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