Correlation Between Banpu PCL and MC Mining

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

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

Diversification Opportunities for Banpu PCL and MC Mining

0.09

Correlation Coefficient

Banpu PCL  MC Mining

Significant diversification

The 3 months correlation between Banpu and G1V is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Banpu PCL and MC Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MC Mining and Banpu PCL 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 Banpu PCL are associated (or correlated) with MC Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MC Mining has no effect on the direction of Banpu PCL i.e., Banpu PCL and MC Mining go up and down completely randomly.

Pair Corralation between Banpu PCL and MC Mining

Assuming the 90 days trading horizon Banpu PCL is expected to under-perform the MC Mining. But the stock apears to be less risky and, when comparing its historical volatility, Banpu PCL is 25.73 times less risky than MC Mining. The stock trades about -0.05 of its potential returns per unit of risk. The MC Mining is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.20  in MC Mining on September 23, 2024 and sell it today you would lose (0.05) from holding MC Mining or give up 25.0% of portfolio value over 90 days.

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

Banpu PCL  vs.  MC Mining

Banpu PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banpu PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic 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.

MC Mining

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MC Mining are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MC Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Banpu PCL and MC Mining

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

The idea behind Banpu PCL and MC 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.