Correlation Between MFF Capital and Kingsrose Mining

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

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

Diversification Opportunities for MFF Capital and Kingsrose Mining

-0.18

Correlation Coefficient

MFF Capital  Kingsrose Mining

Good diversification

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

Pair Corralation between MFF Capital and Kingsrose Mining

Assuming the 90 days trading horizon MFF Capital Investments is expected to generate 0.21 times more return on investment than Kingsrose Mining. However, MFF Capital Investments is 4.7 times less risky than Kingsrose Mining. It trades about 0.2 of its potential returns per unit of risk. Kingsrose Mining is currently generating about 0.03 per unit of risk. If you would invest  382.00  in MFF Capital Investments on August 31, 2024 and sell it today you would earn a total of  52.00  from holding MFF Capital Investments or generate 13.61% return on investment over 90 days.

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

MFF Capital Investments  vs.  Kingsrose Mining

MFF Capital Investments

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MFF Capital Investments are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, MFF Capital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kingsrose Mining

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kingsrose Mining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Kingsrose Mining may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with MFF Capital and Kingsrose Mining

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

The idea behind MFF Capital Investments and Kingsrose 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.