Correlation Between VM Hotel and Magna Mining

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Can any of the company-specific risk be diversified away by investing in both VM Hotel and Magna 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 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

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between VMH-U and Magna is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding VM Hotel Acquisition and Magna Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna Mining and VM Hotel 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 VM Hotel Acquisition are associated (or correlated) with Magna Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna Mining has no effect on the direction of VM Hotel i.e., VM Hotel and Magna Mining go up and down completely randomly.

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.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

VM Hotel Acquisition  vs.  Magna Mining

 Performance 
       Timeline  
VM Hotel Acquisition 

Risk-Adjusted Performance

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Over the last 90 days VM Hotel Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, VM Hotel is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.
Magna Mining 

Risk-Adjusted Performance

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

VM Hotel and Magna Mining Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with VM Hotel and Magna Mining

The 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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