Correlation Between Macmahon Holdings and Base Resources
Can any of the company-specific risk be diversified away by investing in both Macmahon Holdings and Base Resources 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 Macmahon Holdings and Base Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macmahon Holdings Limited and Base Resources Limited, you can compare the effects of market volatilities on Macmahon Holdings and Base Resources 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 Macmahon Holdings with a short position of Base Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macmahon Holdings and Base Resources.
Diversification Opportunities for Macmahon Holdings and Base Resources
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Macmahon and Base is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Macmahon Holdings Limited and Base Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Base Resources and Macmahon Holdings 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 Macmahon Holdings Limited are associated (or correlated) with Base Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Base Resources has no effect on the direction of Macmahon Holdings i.e., Macmahon Holdings and Base Resources go up and down completely randomly.
Pair Corralation between Macmahon Holdings and Base Resources
Assuming the 90 days horizon Macmahon Holdings is expected to generate 1.96 times less return on investment than Base Resources. But when comparing it to its historical volatility, Macmahon Holdings Limited is 2.84 times less risky than Base Resources. It trades about 0.07 of its potential returns per unit of risk. Base Resources Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Base Resources Limited on October 20, 2024 and sell it today you would earn a total of 9.00 from holding Base Resources Limited or generate 81.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 84.71% |
| Values | Daily Returns |
Macmahon Holdings Limited vs. Base Resources Limited
Performance |
| Timeline |
| Macmahon Holdings |
| Base Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Macmahon Holdings and Base Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macmahon Holdings and Base Resources
The main advantage of trading using opposite Macmahon Holdings and Base Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macmahon Holdings position performs unexpectedly, Base Resources 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 Base Resources will offset losses from the drop in Base Resources' long position.| Macmahon Holdings vs. Major Drilling Group | Macmahon Holdings vs. Forsys Metals Corp | Macmahon Holdings vs. Black Mammoth Metals | Macmahon Holdings vs. Getty Copper |
| Base Resources vs. Macmahon Holdings Limited | Base Resources vs. Rokmaster Resources Corp | Base Resources vs. Hudson Resources | Base Resources vs. Thunder Gold Corp |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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