Correlation Between MFF Capital and Andean Silver
Can any of the company-specific risk be diversified away by investing in both MFF Capital and Andean Silver 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 MFF Capital and Andean Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MFF Capital Investments and Andean Silver Limited, you can compare the effects of market volatilities on MFF Capital and Andean Silver 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 MFF Capital with a short position of Andean Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFF Capital and Andean Silver.
Diversification Opportunities for MFF Capital and Andean Silver
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MFF and Andean is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding MFF Capital Investments and Andean Silver Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andean Silver Limited and MFF Capital 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 MFF Capital Investments are associated (or correlated) with Andean Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andean Silver Limited has no effect on the direction of MFF Capital i.e., MFF Capital and Andean Silver go up and down completely randomly.
Pair Corralation between MFF Capital and Andean Silver
Assuming the 90 days trading horizon MFF Capital is expected to generate 17.22 times less return on investment than Andean Silver. But when comparing it to its historical volatility, MFF Capital Investments is 6.64 times less risky than Andean Silver. It trades about 0.13 of its potential returns per unit of risk. Andean Silver Limited is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 84.00 in Andean Silver Limited on November 3, 2024 and sell it today you would earn a total of 31.00 from holding Andean Silver Limited or generate 36.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFF Capital Investments vs. Andean Silver Limited
Performance |
| Timeline |
| MFF Capital Investments |
| Andean Silver Limited |
MFF Capital and Andean Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFF Capital and Andean Silver
The main advantage of trading using opposite MFF Capital and Andean Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFF Capital position performs unexpectedly, Andean Silver 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 Andean Silver will offset losses from the drop in Andean Silver's long position.| MFF Capital vs. Centaurus Metals | MFF Capital vs. Super Retail Group | MFF Capital vs. Gold Road Resources | MFF Capital vs. Iron Road |
| Andean Silver vs. Cosmo Metals | Andean Silver vs. Collins Foods | Andean Silver vs. Falcon Metals | Andean Silver vs. Hotel Property Investments |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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