diversifiable risk of combining VM Hotel and Magna Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VM Hotel Acquisition and Magna Mining, you can compare the effects of market volatilities on VM Hotel and Magna 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 VM Hotel with a short position of Magna Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of VM Hotel and Magna Mining.
Diversification Opportunities for VM Hotel and Magna Mining
Pair Corralation between VM Hotel and Magna Mining
Assuming the 90 days trading horizon VM Hotel Acquisition is expected to generate 0.3 times more return on investment than Magna Mining. However, VM Hotel Acquisition is 3.31 times less risky than Magna Mining. It trades about 0.03 of its potential returns per unit of risk. Magna Mining is currently generating about -0.07 per unit of risk. If you would invest 936.00 in VM Hotel Acquisition on December 3, 2023 and sell it today you would earn a total of 59.00 from holding VM Hotel Acquisition or generate 6.3% return on investment over 90 days.
VM Hotel Acquisition vs. Magna Mining
VM Hotel and Magna Mining Volatility Contrast
Pair Trading with VM Hotel and Magna MiningThe main advantage of trading using opposite VM Hotel and Magna Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VM Hotel position performs unexpectedly, Magna 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 Magna Mining will offset losses from the drop in Magna Mining's long position. The idea behind VM Hotel Acquisition and Magna 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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