Correlation Between SIMS METAL and MAGNUM MINING
Can any of the company-specific risk be diversified away by investing in both SIMS METAL and MAGNUM 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 SIMS METAL and MAGNUM MINING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIMS METAL MGT and MAGNUM MINING EXP, you can compare the effects of market volatilities on SIMS METAL and MAGNUM 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 SIMS METAL with a short position of MAGNUM MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMS METAL and MAGNUM MINING.
Diversification Opportunities for SIMS METAL and MAGNUM MINING
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SIMS and MAGNUM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SIMS METAL MGT and MAGNUM MINING EXP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAGNUM MINING EXP and SIMS METAL 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 SIMS METAL MGT are associated (or correlated) with MAGNUM MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAGNUM MINING EXP has no effect on the direction of SIMS METAL i.e., SIMS METAL and MAGNUM MINING go up and down completely randomly.
Pair Corralation between SIMS METAL and MAGNUM MINING
If you would invest 6.08 in MAGNUM MINING EXP on September 13, 2024 and sell it today you would earn a total of 0.00 from holding MAGNUM MINING EXP or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIMS METAL MGT vs. MAGNUM MINING EXP
Performance |
| Timeline |
| SIMS METAL MGT |
| MAGNUM MINING EXP |
SIMS METAL and MAGNUM MINING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMS METAL and MAGNUM MINING
The main advantage of trading using opposite SIMS METAL and MAGNUM MINING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMS METAL position performs unexpectedly, MAGNUM 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 MAGNUM MINING will offset losses from the drop in MAGNUM MINING's long position.The idea behind SIMS METAL MGT and MAGNUM MINING EXP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| MAGNUM MINING vs. Apple Inc | MAGNUM MINING vs. Apple Inc | MAGNUM MINING vs. Apple Inc | MAGNUM MINING vs. Apple Inc |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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