Correlation Between Ferrexpo PLC and Mkango Resources
Can any of the company-specific risk be diversified away by investing in both Ferrexpo PLC and Mkango Resources 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 Ferrexpo PLC and Mkango Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferrexpo PLC and Mkango Resources, you can compare the effects of market volatilities on Ferrexpo PLC and Mkango Resources 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 Ferrexpo PLC with a short position of Mkango Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrexpo PLC and Mkango Resources.
Diversification Opportunities for Ferrexpo PLC and Mkango Resources
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ferrexpo and Mkango is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ferrexpo PLC and Mkango Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mkango Resources and Ferrexpo PLC 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 Ferrexpo PLC are associated (or correlated) with Mkango Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mkango Resources has no effect on the direction of Ferrexpo PLC i.e., Ferrexpo PLC and Mkango Resources go up and down completely randomly.
Pair Corralation between Ferrexpo PLC and Mkango Resources
Assuming the 90 days trading horizon Ferrexpo PLC is expected to generate 0.92 times more return on investment than Mkango Resources. However, Ferrexpo PLC is 1.09 times less risky than Mkango Resources. It trades about 0.05 of its potential returns per unit of risk. Mkango Resources is currently generating about 0.01 per unit of risk. If you would invest 7,216 in Ferrexpo PLC on September 12, 2024 and sell it today you would earn a total of 3,684 from holding Ferrexpo PLC or generate 51.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.7% |
| Values | Daily Returns |
Ferrexpo PLC vs. Mkango Resources
Performance |
| Timeline |
| Ferrexpo PLC |
| Mkango Resources |
Ferrexpo PLC and Mkango Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferrexpo PLC and Mkango Resources
The main advantage of trading using opposite Ferrexpo PLC and Mkango Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrexpo PLC position performs unexpectedly, Mkango Resources 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 Mkango Resources will offset losses from the drop in Mkango Resources' long position.| Ferrexpo PLC vs. Beeks Trading | Ferrexpo PLC vs. Wheaton Precious Metals | Ferrexpo PLC vs. Bisichi Mining PLC | Ferrexpo PLC vs. CNH Industrial NV |
| Mkango Resources vs. Albion Technology General | Mkango Resources vs. Darden Restaurants | Mkango Resources vs. Polar Capital Technology | Mkango Resources vs. Sunny Optical Technology |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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