Correlation Between Asiabasemetals and Magnum Goldcorp
Can any of the company-specific risk be diversified away by investing in both Asiabasemetals and Magnum Goldcorp 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 Asiabasemetals and Magnum Goldcorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asiabasemetals and Magnum Goldcorp, you can compare the effects of market volatilities on Asiabasemetals and Magnum Goldcorp 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 Asiabasemetals with a short position of Magnum Goldcorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asiabasemetals and Magnum Goldcorp.
Diversification Opportunities for Asiabasemetals and Magnum Goldcorp
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Asiabasemetals and Magnum is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Asiabasemetals and Magnum Goldcorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnum Goldcorp and Asiabasemetals 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 Asiabasemetals are associated (or correlated) with Magnum Goldcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnum Goldcorp has no effect on the direction of Asiabasemetals i.e., Asiabasemetals and Magnum Goldcorp go up and down completely randomly.
Pair Corralation between Asiabasemetals and Magnum Goldcorp
Assuming the 90 days horizon Asiabasemetals is expected to generate 0.37 times more return on investment than Magnum Goldcorp. However, Asiabasemetals is 2.71 times less risky than Magnum Goldcorp. It trades about 0.04 of its potential returns per unit of risk. Magnum Goldcorp is currently generating about -0.03 per unit of risk. If you would invest 8.50 in Asiabasemetals on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Asiabasemetals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asiabasemetals vs. Magnum Goldcorp
Performance |
| Timeline |
| Asiabasemetals |
| Magnum Goldcorp |
Asiabasemetals and Magnum Goldcorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asiabasemetals and Magnum Goldcorp
The main advantage of trading using opposite Asiabasemetals and Magnum Goldcorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asiabasemetals position performs unexpectedly, Magnum Goldcorp 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 Goldcorp will offset losses from the drop in Magnum Goldcorp's long position.| Asiabasemetals vs. 2028 Investment Grade | Asiabasemetals vs. Economic Investment Trust | Asiabasemetals vs. Westshore Terminals Investment | Asiabasemetals vs. Partners Value Investments |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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