Correlation Between Mene and GoldMoney

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

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

Diversification Opportunities for Mene and GoldMoney

-0.18

Correlation Coefficient

Mene  GoldMoney

Good diversification

The 3 months correlation between Mene and GoldMoney is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Mene Inc and GoldMoney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMoney and Mene 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 Mene Inc are associated (or correlated) with GoldMoney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMoney has no effect on the direction of Mene i.e., Mene and GoldMoney go up and down completely randomly.

Pair Corralation between Mene and GoldMoney

Assuming the 90 days horizon Mene Inc is expected to generate 3.03 times more return on investment than GoldMoney. However, Mene is 3.03 times more volatile than GoldMoney. It trades about 0.01 of its potential returns per unit of risk. GoldMoney is currently generating about -0.12 per unit of risk. If you would invest  9.12  in Mene Inc on September 4, 2024 and sell it today you would lose (0.62) from holding Mene Inc or give up 6.8% of portfolio value over 90 days.

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

Mene Inc  vs.  GoldMoney

Mene Inc

Risk-Adjusted Performance

0 of 100

Insignificant

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

GoldMoney

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GoldMoney has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating 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.

Pair Trading with Mene and GoldMoney

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

The idea behind Mene Inc and GoldMoney 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.