Correlation Between Laureate Education and Monument Mining
Can any of the company-specific risk be diversified away by investing in both Laureate Education and Monument 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 Laureate Education and Monument Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laureate Education and Monument Mining Limited, you can compare the effects of market volatilities on Laureate Education and Monument 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 Laureate Education with a short position of Monument Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laureate Education and Monument Mining.
Diversification Opportunities for Laureate Education and Monument Mining
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Laureate and Monument is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Laureate Education and Monument Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monument Mining and Laureate Education 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 Laureate Education are associated (or correlated) with Monument Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monument Mining has no effect on the direction of Laureate Education i.e., Laureate Education and Monument Mining go up and down completely randomly.
Pair Corralation between Laureate Education and Monument Mining
Assuming the 90 days trading horizon Laureate Education is expected to under-perform the Monument Mining. But the stock apears to be less risky and, when comparing its historical volatility, Laureate Education is 3.55 times less risky than Monument Mining. The stock trades about -0.02 of its potential returns per unit of risk. The Monument Mining Limited is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Monument Mining Limited on November 1, 2024 and sell it today you would earn a total of 5.00 from holding Monument Mining Limited or generate 29.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laureate Education vs. Monument Mining Limited
Performance |
| Timeline |
| Laureate Education |
| Monument Mining |
Laureate Education and Monument Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laureate Education and Monument Mining
The main advantage of trading using opposite Laureate Education and Monument Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laureate Education position performs unexpectedly, Monument 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 Monument Mining will offset losses from the drop in Monument Mining's long position.| Laureate Education vs. SIDETRADE EO 1 | Laureate Education vs. Dairy Farm International | Laureate Education vs. SALESFORCE INC CDR | Laureate Education vs. TITAN MACHINERY |
| Monument Mining vs. Siemens Healthineers AG | Monument Mining vs. SHIP HEALTHCARE HLDGINC | Monument Mining vs. USWE SPORTS AB | Monument Mining vs. MPH Health Care |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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