Correlation Between M3 Mining and Metro Mining
Can any of the company-specific risk be diversified away by investing in both M3 Mining and Metro 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 M3 Mining and Metro Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between M3 Mining and Metro Mining, you can compare the effects of market volatilities on M3 Mining and Metro 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 M3 Mining with a short position of Metro Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of M3 Mining and Metro Mining.
Diversification Opportunities for M3 Mining and Metro Mining
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between M3M and Metro is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding M3 Mining and Metro Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Mining and M3 Mining 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 M3 Mining are associated (or correlated) with Metro Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Mining has no effect on the direction of M3 Mining i.e., M3 Mining and Metro Mining go up and down completely randomly.
Pair Corralation between M3 Mining and Metro Mining
Assuming the 90 days trading horizon M3 Mining is expected to under-perform the Metro Mining. But the stock apears to be less risky and, when comparing its historical volatility, M3 Mining is 1.11 times less risky than Metro Mining. The stock trades about -0.03 of its potential returns per unit of risk. The Metro Mining is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1.50 in Metro Mining on September 3, 2024 and sell it today you would earn a total of 4.80 from holding Metro Mining or generate 320.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
M3 Mining vs. Metro Mining
Performance |
| Timeline |
| M3 Mining |
| Metro Mining |
M3 Mining and Metro Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M3 Mining and Metro Mining
The main advantage of trading using opposite M3 Mining and Metro Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M3 Mining position performs unexpectedly, Metro 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 Metro Mining will offset losses from the drop in Metro Mining's long position.| M3 Mining vs. Northern Star Resources | M3 Mining vs. Evolution Mining | M3 Mining vs. Bluescope Steel | M3 Mining vs. Aneka Tambang Tbk |
| Metro Mining vs. Northern Star Resources | Metro Mining vs. Evolution Mining | Metro Mining vs. Bluescope Steel | Metro Mining vs. Aneka Tambang Tbk |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |