Correlation Between Natural Resource and Mongolian Mining
Can any of the company-specific risk be diversified away by investing in both Natural Resource and Mongolian 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 Natural Resource and Mongolian Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Resource Partners and Mongolian Mining, you can compare the effects of market volatilities on Natural Resource and Mongolian 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 Natural Resource with a short position of Mongolian Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Resource and Mongolian Mining.
Diversification Opportunities for Natural Resource and Mongolian Mining
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Natural and Mongolian is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Natural Resource Partners and Mongolian Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mongolian Mining and Natural Resource 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 Natural Resource Partners are associated (or correlated) with Mongolian Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mongolian Mining has no effect on the direction of Natural Resource i.e., Natural Resource and Mongolian Mining go up and down completely randomly.
Pair Corralation between Natural Resource and Mongolian Mining
Considering the 90-day investment horizon Natural Resource is expected to generate 1.06 times less return on investment than Mongolian Mining. But when comparing it to its historical volatility, Natural Resource Partners is 4.93 times less risky than Mongolian Mining. It trades about 0.07 of its potential returns per unit of risk. Mongolian Mining is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 140.00 in Mongolian Mining on September 8, 2025 and sell it today you would lose (5.00) from holding Mongolian Mining or give up 3.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natural Resource Partners vs. Mongolian Mining
Performance |
| Timeline |
| Natural Resource Partners |
| Mongolian Mining |
Natural Resource and Mongolian Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Resource and Mongolian Mining
The main advantage of trading using opposite Natural Resource and Mongolian Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Resource position performs unexpectedly, Mongolian 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 Mongolian Mining will offset losses from the drop in Mongolian Mining's long position.| Natural Resource vs. Yuexiu Transport Infrastructure | Natural Resource vs. Jaco Electronics | Natural Resource vs. Klegg Electronics | Natural Resource vs. Knight Transportation |
| Mongolian Mining vs. Warrior Met Coal | Mongolian Mining vs. Coronado Global Resources | Mongolian Mining vs. Stanmore Resources Limited | Mongolian Mining vs. Alpha Metallurgical Resources |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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