Correlation Between De Grey and M3 Mining
Can any of the company-specific risk be diversified away by investing in both De Grey 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 De Grey and M3 Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Grey Mining and M3 Mining, you can compare the effects of market volatilities on De Grey 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 De Grey with a short position of M3 Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Grey and M3 Mining.
Diversification Opportunities for De Grey and M3 Mining
Modest diversification
The 3 months correlation between DEG and M3M is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining and M3 Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M3 Mining and De Grey 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 De Grey Mining 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 De Grey i.e., De Grey and M3 Mining go up and down completely randomly.
Pair Corralation between De Grey and M3 Mining
Assuming the 90 days trading horizon De Grey Mining is expected to generate 0.5 times more return on investment than M3 Mining. However, De Grey Mining is 1.99 times less risky than M3 Mining. It trades about 0.05 of its potential returns per unit of risk. M3 Mining is currently generating about -0.14 per unit of risk. If you would invest 145.00 in De Grey Mining on August 28, 2024 and sell it today you would earn a total of 3.00 from holding De Grey Mining or generate 2.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
De Grey Mining vs. M3 Mining
Performance |
| Timeline |
| De Grey Mining |
| M3 Mining |
De Grey and M3 Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Grey and M3 Mining
The main advantage of trading using opposite De Grey and M3 Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Grey 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.| De Grey vs. Aurelia Metals | De Grey vs. Austco Healthcare | De Grey vs. Health and Plant | De Grey vs. Alto Metals |
| M3 Mining vs. Group 6 Metals | M3 Mining vs. Aurelia Metals | M3 Mining vs. Microequities Asset Management | M3 Mining vs. DY6 Metals |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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