Correlation Between Technology Minerals and Moonpig Group

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

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

Diversification Opportunities for Technology Minerals and Moonpig Group

-0.48

Correlation Coefficient

Technology Minerals  Moonpig Group

Very good diversification

The 3 months correlation between Technology and Moonpig is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Technology Minerals PLC and Moonpig Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moonpig Group PLC and Technology 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 Technology Minerals PLC are associated (or correlated) with Moonpig Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moonpig Group PLC has no effect on the direction of Technology Minerals i.e., Technology Minerals and Moonpig Group go up and down completely randomly.

Pair Corralation between Technology Minerals and Moonpig Group

Assuming the 90 days trading horizon Technology Minerals PLC is expected to under-perform the Moonpig Group. In addition to that, Technology Minerals is 3.78 times more volatile than Moonpig Group PLC. It trades about -0.01 of its total potential returns per unit of risk. Moonpig Group PLC is currently generating about 0.06 per unit of volatility. If you would invest  11,740  in Moonpig Group PLC on October 5, 2024 and sell it today you would earn a total of  9,310  from holding Moonpig Group PLC or generate 79.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Technology Minerals PLC  vs.  Moonpig Group PLC

Technology Minerals PLC

Risk-Adjusted Performance

6 of 100

Modest

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

Moonpig Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moonpig Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Moonpig Group is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Technology Minerals and Moonpig Group

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

The idea behind Technology Minerals PLC and Moonpig Group PLC 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .