Correlation Between African Rainbow and Mantengu Mining
Can any of the company-specific risk be diversified away by investing in both African Rainbow and Mantengu 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 African Rainbow and Mantengu Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between African Rainbow Minerals and Mantengu Mining, you can compare the effects of market volatilities on African Rainbow and Mantengu 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 African Rainbow with a short position of Mantengu Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of African Rainbow and Mantengu Mining.
Diversification Opportunities for African Rainbow and Mantengu Mining
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between African and Mantengu is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding African Rainbow Minerals and Mantengu Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mantengu Mining and African Rainbow 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 African Rainbow Minerals are associated (or correlated) with Mantengu Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mantengu Mining has no effect on the direction of African Rainbow i.e., African Rainbow and Mantengu Mining go up and down completely randomly.
Pair Corralation between African Rainbow and Mantengu Mining
Assuming the 90 days trading horizon African Rainbow Minerals is expected to under-perform the Mantengu Mining. But the stock apears to be less risky and, when comparing its historical volatility, African Rainbow Minerals is 3.35 times less risky than Mantengu Mining. The stock trades about -0.1 of its potential returns per unit of risk. The Mantengu Mining is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 7,900 in Mantengu Mining on October 24, 2024 and sell it today you would lose (1,200) from holding Mantengu Mining or give up 15.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.78% |
| Values | Daily Returns |
African Rainbow Minerals vs. Mantengu Mining
Performance |
| Timeline |
| African Rainbow Minerals |
| Mantengu Mining |
African Rainbow and Mantengu Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with African Rainbow and Mantengu Mining
The main advantage of trading using opposite African Rainbow and Mantengu Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if African Rainbow position performs unexpectedly, Mantengu 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 Mantengu Mining will offset losses from the drop in Mantengu Mining's long position.| African Rainbow vs. Deneb Investments | African Rainbow vs. Hosken Consolidated Investments | African Rainbow vs. MC Mining | African Rainbow vs. We Buy Cars |
| Mantengu Mining vs. Glencore PLC | Mantengu Mining vs. Anglo American PLC | Mantengu Mining vs. South32 | Mantengu Mining vs. African Rainbow Minerals |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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