Correlation Between MC Mining and Afrimat
Can any of the company-specific risk be diversified away by investing in both MC Mining and Afrimat 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 MC Mining and Afrimat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MC Mining and Afrimat, you can compare the effects of market volatilities on MC Mining and Afrimat 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 MC Mining with a short position of Afrimat. Check out your portfolio center. Please also check ongoing floating volatility patterns of MC Mining and Afrimat.
Diversification Opportunities for MC Mining and Afrimat
Average diversification
The 3 months correlation between MCZ and Afrimat is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding MC Mining and Afrimat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afrimat and MC 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 MC Mining are associated (or correlated) with Afrimat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afrimat has no effect on the direction of MC Mining i.e., MC Mining and Afrimat go up and down completely randomly.
Pair Corralation between MC Mining and Afrimat
Assuming the 90 days trading horizon MC Mining is expected to under-perform the Afrimat. But the stock apears to be less risky and, when comparing its historical volatility, MC Mining is 2.11 times less risky than Afrimat. The stock trades about 0.0 of its potential returns per unit of risk. The Afrimat is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 501,667 in Afrimat on September 13, 2024 and sell it today you would earn a total of 204,233 from holding Afrimat or generate 40.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
MC Mining vs. Afrimat
Performance |
| Timeline |
| MC Mining |
| Afrimat |
MC Mining and Afrimat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MC Mining and Afrimat
The main advantage of trading using opposite MC Mining and Afrimat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MC Mining position performs unexpectedly, Afrimat 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 Afrimat will offset losses from the drop in Afrimat's long position.| MC Mining vs. HomeChoice Investments | MC Mining vs. Ascendis Health | MC Mining vs. Safari Investments RSA | MC Mining vs. Hosken Consolidated Investments |
| Afrimat vs. Kumba Iron Ore | Afrimat vs. Safari Investments RSA | Afrimat vs. AfroCentric Investment Corp | Afrimat vs. MC Mining |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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