Correlation Between Manila Mining and Pacificonline Systems
Can any of the company-specific risk be diversified away by investing in both Manila Mining and Pacificonline Systems 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 Manila Mining and Pacificonline Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manila Mining Corp and Pacificonline Systems, you can compare the effects of market volatilities on Manila Mining and Pacificonline Systems 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 Manila Mining with a short position of Pacificonline Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manila Mining and Pacificonline Systems.
Diversification Opportunities for Manila Mining and Pacificonline Systems
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Manila and Pacificonline is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Manila Mining Corp and Pacificonline Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacificonline Systems and Manila 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 Manila Mining Corp are associated (or correlated) with Pacificonline Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacificonline Systems has no effect on the direction of Manila Mining i.e., Manila Mining and Pacificonline Systems go up and down completely randomly.
Pair Corralation between Manila Mining and Pacificonline Systems
Assuming the 90 days trading horizon Manila Mining Corp is expected to under-perform the Pacificonline Systems. But the stock apears to be less risky and, when comparing its historical volatility, Manila Mining Corp is 2.01 times less risky than Pacificonline Systems. The stock trades about -0.66 of its potential returns per unit of risk. The Pacificonline Systems is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest 339.00 in Pacificonline Systems on September 1, 2024 and sell it today you would lose (59.00) from holding Pacificonline Systems or give up 17.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 52.38% |
| Values | Daily Returns |
Manila Mining Corp vs. Pacificonline Systems
Performance |
| Timeline |
| Manila Mining Corp |
| Pacificonline Systems |
Manila Mining and Pacificonline Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manila Mining and Pacificonline Systems
The main advantage of trading using opposite Manila Mining and Pacificonline Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manila Mining position performs unexpectedly, Pacificonline Systems 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 Pacificonline Systems will offset losses from the drop in Pacificonline Systems' long position.The idea behind Manila Mining Corp and Pacificonline Systems 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.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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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