Correlation Between Contango ORE and Monarch Mining

Can any of the company-specific risk be diversified away by investing in both Contango ORE and Monarch Mining 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 Contango ORE and Monarch Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Contango ORE and Monarch Mining, you can compare the effects of market volatilities on Contango ORE and Monarch Mining 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 Contango ORE with a short position of Monarch Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Contango ORE and Monarch Mining.

Diversification Opportunities for Contango ORE and Monarch Mining

0.0

Correlation Coefficient

Contango ORE  Monarch Mining

Pay attention - limited upside

The 3 months correlation between Contango and Monarch is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Contango ORE and Monarch Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monarch Mining and Contango ORE 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 Contango ORE are associated (or correlated) with Monarch Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monarch Mining has no effect on the direction of Contango ORE i.e., Contango ORE and Monarch Mining go up and down completely randomly.

Pair Corralation between Contango ORE and Monarch Mining

If you would invest  0.31  in Monarch Mining on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Monarch Mining or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	76.19%
Values	Daily Returns

Contango ORE  vs.  Monarch Mining

Contango ORE

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Contango ORE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Monarch Mining

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Monarch Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Monarch Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Contango ORE and Monarch Mining

The main advantage of trading using opposite Contango ORE and Monarch Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Contango ORE position performs unexpectedly, Monarch Mining 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 Monarch Mining will offset losses from the drop in Monarch Mining's long position.

The idea behind Contango ORE and Monarch Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.