Correlation Between Makara Mining and Revival Gold

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

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

Diversification Opportunities for Makara Mining and Revival Gold

0.46

Correlation Coefficient

Makara Mining  Revival Gold

Very weak diversification

The 3 months correlation between Makara and Revival is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Makara Mining Corp and Revival Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revival Gold and Makara 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 Makara Mining Corp are associated (or correlated) with Revival Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revival Gold has no effect on the direction of Makara Mining i.e., Makara Mining and Revival Gold go up and down completely randomly.

Pair Corralation between Makara Mining and Revival Gold

Assuming the 90 days horizon Makara Mining Corp is expected to generate 4.63 times more return on investment than Revival Gold. However, Makara Mining is 4.63 times more volatile than Revival Gold. It trades about 0.09 of its potential returns per unit of risk. Revival Gold is currently generating about -0.01 per unit of risk. If you would invest  16.00  in Makara Mining Corp on September 12, 2024 and sell it today you would lose (7.20) from holding Makara Mining Corp or give up 45.0% of portfolio value over 90 days.

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

Makara Mining Corp  vs.  Revival Gold

Makara Mining Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Makara Mining Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Makara Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Revival Gold

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Makara Mining and Revival Gold

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

The idea behind Makara Mining Corp and Revival Gold 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 Global Correlations module to find global opportunities by holding instruments from different markets.