Correlation Between Mako Mining and Allied Gold

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

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

Diversification Opportunities for Mako Mining and Allied Gold

0.56

Correlation Coefficient

Mako Mining  Allied Gold

Very weak diversification

The 3 months correlation between Mako and Allied is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Mako Mining Corp and Allied Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Gold and Mako 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 Mako Mining Corp are associated (or correlated) with Allied Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Gold has no effect on the direction of Mako Mining i.e., Mako Mining and Allied Gold go up and down completely randomly.

Pair Corralation between Mako Mining and Allied Gold

Assuming the 90 days horizon Mako Mining is expected to generate 7.06 times less return on investment than Allied Gold. But when comparing it to its historical volatility, Mako Mining Corp is 1.6 times less risky than Allied Gold. It trades about 0.01 of its potential returns per unit of risk. Allied Gold is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  335.00  in Allied Gold on September 16, 2024 and sell it today you would earn a total of  15.00  from holding Allied Gold or generate 4.48% return on investment over 90 days.

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

Mako Mining Corp  vs.  Allied Gold

Mako Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Allied Gold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Allied Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Allied Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mako Mining and Allied Gold

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

The idea behind Mako Mining Corp and Allied 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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.