Correlation Between Diamcor Mining and McEwen Mining

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

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

Diversification Opportunities for Diamcor Mining and McEwen Mining

0.55

Correlation Coefficient

Diamcor Mining  McEwen Mining

Very weak diversification

The 3 months correlation between Diamcor and McEwen is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Diamcor Mining and McEwen Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McEwen Mining and Diamcor 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 Diamcor Mining are associated (or correlated) with McEwen Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McEwen Mining has no effect on the direction of Diamcor Mining i.e., Diamcor Mining and McEwen Mining go up and down completely randomly.

Pair Corralation between Diamcor Mining and McEwen Mining

Assuming the 90 days horizon Diamcor Mining is expected to under-perform the McEwen Mining. In addition to that, Diamcor Mining is 1.32 times more volatile than McEwen Mining. It trades about -0.13 of its total potential returns per unit of risk. McEwen Mining is currently generating about 0.0 per unit of volatility. If you would invest  936.00  in McEwen Mining on September 12, 2024 and sell it today you would lose (23.00) from holding McEwen Mining or give up 2.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Diamcor Mining  vs.  McEwen Mining

Diamcor Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diamcor Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

McEwen Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days McEwen Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, McEwen Mining is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Diamcor Mining and McEwen Mining

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

The idea behind Diamcor Mining and McEwen 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.