Correlation Between Bonanza Goldfields and Macmahon Holdings
Can any of the company-specific risk be diversified away by investing in both Bonanza Goldfields and Macmahon Holdings 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 Bonanza Goldfields and Macmahon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bonanza Goldfields and Macmahon Holdings Limited, you can compare the effects of market volatilities on Bonanza Goldfields and Macmahon Holdings 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 Bonanza Goldfields with a short position of Macmahon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bonanza Goldfields and Macmahon Holdings.
Diversification Opportunities for Bonanza Goldfields and Macmahon Holdings
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bonanza and Macmahon is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bonanza Goldfields and Macmahon Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macmahon Holdings and Bonanza Goldfields 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 Bonanza Goldfields are associated (or correlated) with Macmahon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macmahon Holdings has no effect on the direction of Bonanza Goldfields i.e., Bonanza Goldfields and Macmahon Holdings go up and down completely randomly.
Pair Corralation between Bonanza Goldfields and Macmahon Holdings
If you would invest 11.00 in Macmahon Holdings Limited on September 14, 2024 and sell it today you would earn a total of 14.00 from holding Macmahon Holdings Limited or generate 127.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 0.47% |
| Values | Daily Returns |
Bonanza Goldfields vs. Macmahon Holdings Limited
Performance |
| Timeline |
| Bonanza Goldfields |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Macmahon Holdings |
Bonanza Goldfields and Macmahon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bonanza Goldfields and Macmahon Holdings
The main advantage of trading using opposite Bonanza Goldfields and Macmahon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bonanza Goldfields position performs unexpectedly, Macmahon Holdings 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 Macmahon Holdings will offset losses from the drop in Macmahon Holdings' long position.| Bonanza Goldfields vs. Metallis Resources | Bonanza Goldfields vs. Macmahon Holdings Limited | Bonanza Goldfields vs. Prime Meridian Resources | Bonanza Goldfields vs. Mundoro Capital |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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