Correlation Between Makara Mining and Big Ridge
Can any of the company-specific risk be diversified away by investing in both Makara Mining and Big Ridge 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 Makara Mining and Big Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Makara Mining Corp and Big Ridge Gold, you can compare the effects of market volatilities on Makara Mining and Big Ridge 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 Makara Mining with a short position of Big Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Makara Mining and Big Ridge.
Diversification Opportunities for Makara Mining and Big Ridge
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Makara and Big is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Makara Mining Corp and Big Ridge Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Ridge Gold and Makara 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 Makara Mining Corp are associated (or correlated) with Big Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Ridge Gold has no effect on the direction of Makara Mining i.e., Makara Mining and Big Ridge go up and down completely randomly.
Pair Corralation between Makara Mining and Big Ridge
Assuming the 90 days horizon Makara Mining Corp is expected to generate 5.95 times more return on investment than Big Ridge. However, Makara Mining is 5.95 times more volatile than Big Ridge Gold. It trades about 0.09 of its potential returns per unit of risk. Big Ridge Gold is currently generating about 0.03 per unit of risk. If you would invest 10.00 in Makara Mining Corp on September 12, 2024 and sell it today you would lose (1.20) from holding Makara Mining Corp or give up 12.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Makara Mining Corp vs. Big Ridge Gold
Performance |
| Timeline |
| Makara Mining Corp |
| Big Ridge Gold |
Makara Mining and Big Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Makara Mining and Big Ridge
The main advantage of trading using opposite Makara Mining and Big Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Makara Mining position performs unexpectedly, Big Ridge 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 Big Ridge will offset losses from the drop in Big Ridge's long position.| Makara Mining vs. Revival Gold | Makara Mining vs. Galiano Gold | Makara Mining vs. US Gold Corp | Makara Mining vs. HUMANA INC |
| Big Ridge vs. Revival Gold | Big Ridge vs. Galiano Gold | Big Ridge vs. US Gold Corp | Big Ridge vs. HUMANA 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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