Correlation Between Base Resources and Peak Resources
Can any of the company-specific risk be diversified away by investing in both Base Resources and Peak Resources 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 Base Resources and Peak Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Base Resources Limited and Peak Resources Limited, you can compare the effects of market volatilities on Base Resources and Peak Resources 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 Base Resources with a short position of Peak Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Base Resources and Peak Resources.
Diversification Opportunities for Base Resources and Peak Resources
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Base and Peak is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Base Resources Limited and Peak Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peak Resources and Base Resources 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 Base Resources Limited are associated (or correlated) with Peak Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peak Resources has no effect on the direction of Base Resources i.e., Base Resources and Peak Resources go up and down completely randomly.
Pair Corralation between Base Resources and Peak Resources
Assuming the 90 days horizon Base Resources is expected to generate 2.93 times less return on investment than Peak Resources. But when comparing it to its historical volatility, Base Resources Limited is 3.97 times less risky than Peak Resources. It trades about 0.06 of its potential returns per unit of risk. Peak Resources Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 34.00 in Peak Resources Limited on August 26, 2024 and sell it today you would lose (21.00) from holding Peak Resources Limited or give up 61.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 91.12% |
| Values | Daily Returns |
Base Resources Limited vs. Peak Resources Limited
Performance |
| Timeline |
| Base Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Peak Resources |
Base Resources and Peak Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Base Resources and Peak Resources
The main advantage of trading using opposite Base Resources and Peak Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Base Resources position performs unexpectedly, Peak Resources 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 Peak Resources will offset losses from the drop in Peak Resources' long position.| Base Resources vs. Macmahon Holdings Limited | Base Resources vs. Rokmaster Resources Corp | Base Resources vs. Hudson Resources | Base Resources vs. Thunder Gold Corp |
| Peak Resources vs. Greenland Minerals And | Peak Resources vs. Arizona Lithium Limited | Peak Resources vs. Arafura Resources | Peak Resources vs. Green Technology Metals |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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