Correlation Between Manila Mining and National Reinsurance

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Can any of the company-specific risk be diversified away by investing in both Manila Mining and National Reinsurance 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 National Reinsurance 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 National Reinsurance, you can compare the effects of market volatilities on Manila Mining and National Reinsurance 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 National Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manila Mining and National Reinsurance.

Diversification Opportunities for Manila Mining and National Reinsurance

ManilaNationalDiversified AwayManilaNationalDiversified Away100%
0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between Manila and National is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Manila Mining Corp and National Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Reinsurance 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 National Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Reinsurance has no effect on the direction of Manila Mining i.e., Manila Mining and National Reinsurance go up and down completely randomly.

Pair Corralation between Manila Mining and National Reinsurance

Assuming the 90 days trading horizon Manila Mining Corp is expected to under-perform the National Reinsurance. But the stock apears to be less risky and, when comparing its historical volatility, Manila Mining Corp is 1.49 times less risky than National Reinsurance. The stock trades about -0.13 of its potential returns per unit of risk. The National Reinsurance is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  79.00  in National Reinsurance on September 19, 2024 and sell it today you would lose (10.00) from holding National Reinsurance or give up 12.66% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy63.93%
ValuesDaily Returns

Manila Mining Corp  vs.  National Reinsurance

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -30-20-1001020
JavaScript chart by amCharts 3.21.15MAB NRCP
       Timeline  
Manila Mining Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Manila Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
JavaScript chart by amCharts 3.21.15SepOctNovDecOctNovDec0.0030.00320.00340.00360.00380.0040.0042
National Reinsurance 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days National Reinsurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec0.550.60.650.70.750.80.85

Manila Mining and National Reinsurance Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.66-4.24-2.82-1.4-0.02011.172.383.584.796.0 0.0200.0250.0300.035
JavaScript chart by amCharts 3.21.15MAB NRCP
       Returns  

Pair Trading with Manila Mining and National Reinsurance

The main advantage of trading using opposite Manila Mining and National Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manila Mining position performs unexpectedly, National Reinsurance 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 National Reinsurance will offset losses from the drop in National Reinsurance's long position.
The idea behind Manila Mining Corp and National Reinsurance 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.
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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