Correlation Between Montero Mining and Maritime Resources

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

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

Diversification Opportunities for Montero Mining and Maritime Resources

-0.27

Correlation Coefficient

Montero Mining  Maritime Resources

Very good diversification

The 3 months correlation between Montero and Maritime is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Montero Mining and and Maritime Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maritime Resources Corp and Montero 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 Montero Mining and are associated (or correlated) with Maritime Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maritime Resources Corp has no effect on the direction of Montero Mining i.e., Montero Mining and Maritime Resources go up and down completely randomly.

Pair Corralation between Montero Mining and Maritime Resources

Assuming the 90 days horizon Montero Mining and is expected to under-perform the Maritime Resources. But the stock apears to be less risky and, when comparing its historical volatility, Montero Mining and is 1.64 times less risky than Maritime Resources. The stock trades about -0.02 of its potential returns per unit of risk. The Maritime Resources Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3.50  in Maritime Resources Corp on September 4, 2024 and sell it today you would earn a total of  2.00  from holding Maritime Resources Corp or generate 57.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Montero Mining and  vs.  Maritime Resources Corp

Montero Mining

Risk-Adjusted Performance

0 of 100

Weak

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

Maritime Resources Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Maritime Resources Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Maritime Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Montero Mining and Maritime Resources

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

The idea behind Montero Mining and and Maritime Resources Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.