Correlation Between Mkango Resources and Northern Graphite
Can any of the company-specific risk be diversified away by investing in both Mkango Resources and Northern Graphite 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 Mkango Resources and Northern Graphite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mkango Resources and Northern Graphite, you can compare the effects of market volatilities on Mkango Resources and Northern Graphite 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 Mkango Resources with a short position of Northern Graphite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mkango Resources and Northern Graphite.
Diversification Opportunities for Mkango Resources and Northern Graphite
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Mkango and Northern is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Mkango Resources and Northern Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Graphite and Mkango Resources 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 Mkango Resources are associated (or correlated) with Northern Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Graphite has no effect on the direction of Mkango Resources i.e., Mkango Resources and Northern Graphite go up and down completely randomly.
Pair Corralation between Mkango Resources and Northern Graphite
Assuming the 90 days horizon Mkango Resources is expected to generate 2.45 times more return on investment than Northern Graphite. However, Mkango Resources is 2.45 times more volatile than Northern Graphite. It trades about 0.15 of its potential returns per unit of risk. Northern Graphite is currently generating about -0.02 per unit of risk. If you would invest 11.00 in Mkango Resources on September 1, 2024 and sell it today you would earn a total of 4.00 from holding Mkango Resources or generate 36.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mkango Resources vs. Northern Graphite
Performance |
| Timeline |
| Mkango Resources |
| Northern Graphite |
Mkango Resources and Northern Graphite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mkango Resources and Northern Graphite
The main advantage of trading using opposite Mkango Resources and Northern Graphite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mkango Resources position performs unexpectedly, Northern Graphite 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 Northern Graphite will offset losses from the drop in Northern Graphite's long position.| Mkango Resources vs. Eros Resources Corp | Mkango Resources vs. New Destiny Mining | Mkango Resources vs. Midnight Sun Mining | Mkango Resources vs. Montero Mining and |
| Northern Graphite vs. Focus Graphite | Northern Graphite vs. Mason Graphite | Northern Graphite vs. Lomiko Metals | Northern Graphite vs. Graphite One |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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