Correlation Between Santana Minerals and Medibank Private

Can any of the company-specific risk be diversified away by investing in both Santana Minerals and Medibank Private 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 Santana Minerals and Medibank Private into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Santana Minerals and Medibank Private, you can compare the effects of market volatilities on Santana Minerals and Medibank Private 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 Santana Minerals with a short position of Medibank Private. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santana Minerals and Medibank Private.

Diversification Opportunities for Santana Minerals and Medibank Private

0.68

Correlation Coefficient

Santana Minerals  Medibank Private

Poor diversification

The 3 months correlation between Santana and Medibank is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Santana Minerals and Medibank Private in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medibank Private and Santana Minerals 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 Santana Minerals are associated (or correlated) with Medibank Private. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medibank Private has no effect on the direction of Santana Minerals i.e., Santana Minerals and Medibank Private go up and down completely randomly.

Pair Corralation between Santana Minerals and Medibank Private

Assuming the 90 days trading horizon Santana Minerals is expected to generate 2.44 times more return on investment than Medibank Private. However, Santana Minerals is 2.44 times more volatile than Medibank Private. It trades about 0.08 of its potential returns per unit of risk. Medibank Private is currently generating about 0.18 per unit of risk. If you would invest  49.00  in Santana Minerals on December 28, 2024 and sell it today you would earn a total of  8.00  from holding Santana Minerals or generate 16.33% return on investment over 90 days.

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

Santana Minerals  vs.  Medibank Private

Santana Minerals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Santana Minerals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Santana Minerals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Medibank Private

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Medibank Private are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Medibank Private unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Santana Minerals and Medibank Private

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

The idea behind Santana Minerals and Medibank Private 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.