Correlation Between Marvel Gold and Hummingbird Resources

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

By analyzing existing cross correlation between Marvel Gold Limited and Hummingbird Resources PLC, you can compare the effects of market volatilities on Marvel Gold and Hummingbird Resources 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 Marvel Gold with a short position of Hummingbird Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marvel Gold and Hummingbird Resources.

Diversification Opportunities for Marvel Gold and Hummingbird Resources

0.77

Correlation Coefficient

Marvel Gold  Hummingbird Resources

Poor diversification

The 3 months correlation between Marvel and Hummingbird is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Marvel Gold Limited and Hummingbird Resources PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hummingbird Resources PLC and Marvel Gold 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 Marvel Gold Limited are associated (or correlated) with Hummingbird Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hummingbird Resources PLC has no effect on the direction of Marvel Gold i.e., Marvel Gold and Hummingbird Resources go up and down completely randomly.

Pair Corralation between Marvel Gold and Hummingbird Resources

Assuming the 90 days horizon Marvel Gold Limited is expected to under-perform the Hummingbird Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, Marvel Gold Limited is 1.48 times less risky than Hummingbird Resources. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Hummingbird Resources PLC is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  8.10  in Hummingbird Resources PLC on September 5, 2024 and sell it today you would lose (6.10) from holding Hummingbird Resources PLC or give up 75.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Marvel Gold Limited  vs.  Hummingbird Resources PLC

Marvel Gold Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marvel Gold Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary 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.

Hummingbird Resources PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hummingbird Resources PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic 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.

Pair Trading with Marvel Gold and Hummingbird Resources

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

The idea behind Marvel Gold Limited and Hummingbird Resources PLC 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 Commodity Directory module to find actively traded commodities issued by global exchanges.