Correlation Between Cornish Metals and MG Plc
Can any of the company-specific risk be diversified away by investing in both Cornish Metals and MG Plc 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 Cornish Metals and MG Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornish Metals and MG Plc, you can compare the effects of market volatilities on Cornish Metals and MG Plc 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 Cornish Metals with a short position of MG Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornish Metals and MG Plc.
Diversification Opportunities for Cornish Metals and MG Plc
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cornish and MNG is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Cornish Metals and MG Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MG Plc and Cornish Metals 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 Cornish Metals are associated (or correlated) with MG Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MG Plc has no effect on the direction of Cornish Metals i.e., Cornish Metals and MG Plc go up and down completely randomly.
Pair Corralation between Cornish Metals and MG Plc
Assuming the 90 days trading horizon Cornish Metals is expected to under-perform the MG Plc. In addition to that, Cornish Metals is 2.55 times more volatile than MG Plc. It trades about -0.01 of its total potential returns per unit of risk. MG Plc is currently generating about 0.04 per unit of volatility. If you would invest 16,458 in MG Plc on November 2, 2024 and sell it today you would earn a total of 4,412 from holding MG Plc or generate 26.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cornish Metals vs. MG Plc
Performance |
| Timeline |
| Cornish Metals |
| MG Plc |
Cornish Metals and MG Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornish Metals and MG Plc
The main advantage of trading using opposite Cornish Metals and MG Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornish Metals position performs unexpectedly, MG Plc 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 MG Plc will offset losses from the drop in MG Plc's long position.| Cornish Metals vs. European Metals Holdings | Cornish Metals vs. Central Asia Metals | Cornish Metals vs. Golden Metal Resources | Cornish Metals vs. Naked Wines plc |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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