Correlation Between AHLERS and Peninsula Energy
Can any of the company-specific risk be diversified away by investing in both AHLERS and Peninsula Energy 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 AHLERS and Peninsula Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AHLERS and Peninsula Energy Limited, you can compare the effects of market volatilities on AHLERS and Peninsula Energy 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 AHLERS with a short position of Peninsula Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of AHLERS and Peninsula Energy.
Diversification Opportunities for AHLERS and Peninsula Energy
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AHLERS and Peninsula is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding AHLERS and Peninsula Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peninsula Energy and AHLERS 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 AHLERS are associated (or correlated) with Peninsula Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peninsula Energy has no effect on the direction of AHLERS i.e., AHLERS and Peninsula Energy go up and down completely randomly.
Pair Corralation between AHLERS and Peninsula Energy
Assuming the 90 days trading horizon AHLERS is expected to under-perform the Peninsula Energy. But the stock apears to be less risky and, when comparing its historical volatility, AHLERS is 2.26 times less risky than Peninsula Energy. The stock trades about -0.43 of its potential returns per unit of risk. The Peninsula Energy Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 67.00 in Peninsula Energy Limited on October 17, 2024 and sell it today you would earn a total of 9.00 from holding Peninsula Energy Limited or generate 13.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AHLERS vs. Peninsula Energy Limited
Performance |
| Timeline |
| AHLERS |
| Peninsula Energy |
AHLERS and Peninsula Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AHLERS and Peninsula Energy
The main advantage of trading using opposite AHLERS and Peninsula Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AHLERS position performs unexpectedly, Peninsula Energy 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 Peninsula Energy will offset losses from the drop in Peninsula Energy's long position.The idea behind AHLERS and Peninsula Energy Limited 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.| Peninsula Energy vs. BHP Group Limited | Peninsula Energy vs. BHP Group Limited | Peninsula Energy vs. Rio Tinto Group | Peninsula Energy vs. Rio Tinto Group |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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