Correlation Between Coronado Global and M3 Mining
Can any of the company-specific risk be diversified away by investing in both Coronado Global and M3 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 Coronado Global and M3 Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coronado Global Resources and M3 Mining, you can compare the effects of market volatilities on Coronado Global and M3 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 Coronado Global with a short position of M3 Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coronado Global and M3 Mining.
Diversification Opportunities for Coronado Global and M3 Mining
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Coronado and M3M is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Coronado Global Resources and M3 Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M3 Mining and Coronado Global 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 Coronado Global Resources are associated (or correlated) with M3 Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M3 Mining has no effect on the direction of Coronado Global i.e., Coronado Global and M3 Mining go up and down completely randomly.
Pair Corralation between Coronado Global and M3 Mining
Assuming the 90 days trading horizon Coronado Global Resources is expected to under-perform the M3 Mining. But the stock apears to be less risky and, when comparing its historical volatility, Coronado Global Resources is 2.3 times less risky than M3 Mining. The stock trades about -0.18 of its potential returns per unit of risk. The M3 Mining is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 3.70 in M3 Mining on September 1, 2024 and sell it today you would lose (0.20) from holding M3 Mining or give up 5.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coronado Global Resources vs. M3 Mining
Performance |
| Timeline |
| Coronado Global Resources |
| M3 Mining |
Coronado Global and M3 Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coronado Global and M3 Mining
The main advantage of trading using opposite Coronado Global and M3 Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coronado Global position performs unexpectedly, M3 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 M3 Mining will offset losses from the drop in M3 Mining's long position.| Coronado Global vs. Ramsay Health Care | Coronado Global vs. Oceania Healthcare | Coronado Global vs. Super Retail Group | Coronado Global vs. Charter Hall Education |
| M3 Mining vs. IDP Education | M3 Mining vs. Sky Metals | M3 Mining vs. G8 Education | M3 Mining vs. RLF AgTech |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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