Correlation Between Macmahon Holdings and Decade Resources
Can any of the company-specific risk be diversified away by investing in both Macmahon Holdings and Decade 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 Decade 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 Decade Resources, you can compare the effects of market volatilities on Macmahon Holdings and Decade 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 Decade Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macmahon Holdings and Decade Resources.
Diversification Opportunities for Macmahon Holdings and Decade Resources
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Macmahon and Decade is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Macmahon Holdings Limited and Decade Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Decade 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 Decade Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Decade Resources has no effect on the direction of Macmahon Holdings i.e., Macmahon Holdings and Decade Resources go up and down completely randomly.
Pair Corralation between Macmahon Holdings and Decade Resources
Assuming the 90 days horizon Macmahon Holdings Limited is expected to under-perform the Decade Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, Macmahon Holdings Limited is 10.41 times less risky than Decade Resources. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Decade Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2.80 in Decade Resources on November 27, 2024 and sell it today you would lose (0.30) from holding Decade Resources or give up 10.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macmahon Holdings Limited vs. Decade Resources
Performance |
| Timeline |
| Macmahon Holdings |
| Decade Resources |
Macmahon Holdings and Decade Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macmahon Holdings and Decade Resources
The main advantage of trading using opposite Macmahon Holdings and Decade Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macmahon Holdings position performs unexpectedly, Decade 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 Decade Resources will offset losses from the drop in Decade Resources' long position.| Macmahon Holdings vs. Definitive Healthcare Corp | Macmahon Holdings vs. Xponential Fitness | Macmahon Holdings vs. Fidus Investment Corp | Macmahon Holdings vs. 23Andme Holding Co |
| Decade Resources vs. First American Silver | Decade Resources vs. Australian Vanadium Limited | Decade Resources vs. International Lithium Corp | Decade Resources vs. Wealth Minerals |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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