Correlation Between Monument Mining and Microchip Technology

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

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

Diversification Opportunities for Monument Mining and Microchip Technology

-0.64

Correlation Coefficient

Monument Mining  Microchip Technology

Excellent diversification

The 3 months correlation between Monument and Microchip is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Monument Mining Limited and Microchip Technology Incorpora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microchip Technology and Monument 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 Monument Mining Limited are associated (or correlated) with Microchip Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microchip Technology has no effect on the direction of Monument Mining i.e., Monument Mining and Microchip Technology go up and down completely randomly.

Pair Corralation between Monument Mining and Microchip Technology

Assuming the 90 days trading horizon Monument Mining Limited is expected to under-perform the Microchip Technology. In addition to that, Monument Mining is 1.16 times more volatile than Microchip Technology Incorporated. It trades about -0.04 of its total potential returns per unit of risk. Microchip Technology Incorporated is currently generating about 0.27 per unit of volatility. If you would invest  3,633  in Microchip Technology Incorporated on April 23, 2025 and sell it today you would earn a total of  2,774  from holding Microchip Technology Incorporated or generate 76.36% return on investment over 90 days.

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

Monument Mining Limited  vs.  Microchip Technology Incorpora

Monument Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Monument Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Microchip Technology

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Microchip Technology Incorporated are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Microchip Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monument Mining and Microchip Technology

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

The idea behind Monument Mining Limited and Microchip Technology Incorporated 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.