Correlation Between Prime Meridian and Macmahon Holdings
Can any of the company-specific risk be diversified away by investing in both Prime Meridian and Macmahon Holdings 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 Prime Meridian and Macmahon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prime Meridian Resources and Macmahon Holdings Limited, you can compare the effects of market volatilities on Prime Meridian and Macmahon Holdings 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 Prime Meridian with a short position of Macmahon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Meridian and Macmahon Holdings.
Diversification Opportunities for Prime Meridian and Macmahon Holdings
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prime and Macmahon is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Prime Meridian Resources and Macmahon Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macmahon Holdings and Prime Meridian 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 Prime Meridian Resources are associated (or correlated) with Macmahon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macmahon Holdings has no effect on the direction of Prime Meridian i.e., Prime Meridian and Macmahon Holdings go up and down completely randomly.
Pair Corralation between Prime Meridian and Macmahon Holdings
Assuming the 90 days horizon Prime Meridian Resources is expected to generate 3.36 times more return on investment than Macmahon Holdings. However, Prime Meridian is 3.36 times more volatile than Macmahon Holdings Limited. It trades about 0.04 of its potential returns per unit of risk. Macmahon Holdings Limited is currently generating about 0.08 per unit of risk. If you would invest 8.69 in Prime Meridian Resources on August 29, 2024 and sell it today you would earn a total of 2.31 from holding Prime Meridian Resources or generate 26.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 72.73% |
| Values | Daily Returns |
Prime Meridian Resources vs. Macmahon Holdings Limited
Performance |
| Timeline |
| Prime Meridian Resources |
| Macmahon Holdings |
Prime Meridian and Macmahon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Meridian and Macmahon Holdings
The main advantage of trading using opposite Prime Meridian and Macmahon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Meridian position performs unexpectedly, Macmahon Holdings 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 Macmahon Holdings will offset losses from the drop in Macmahon Holdings' long position.| Prime Meridian vs. Aurion Resources | Prime Meridian vs. Liberty Gold Corp | Prime Meridian vs. Orezone Gold Corp | Prime Meridian vs. Fortuna Silver Mines |
| Macmahon Holdings vs. Ascendant Resources | Macmahon Holdings vs. Cantex Mine Development | Macmahon Holdings vs. Amarc Resources | Macmahon Holdings vs. Sterling Metals 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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