Correlation Between INDIKA ENERGY and Peak Minerals
Can any of the company-specific risk be diversified away by investing in both INDIKA ENERGY and Peak Minerals 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 INDIKA ENERGY and Peak Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INDIKA ENERGY and Peak Minerals Limited, you can compare the effects of market volatilities on INDIKA ENERGY and Peak Minerals 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 INDIKA ENERGY with a short position of Peak Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDIKA ENERGY and Peak Minerals.
Diversification Opportunities for INDIKA ENERGY and Peak Minerals
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between INDIKA and Peak is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding INDIKA ENERGY and Peak Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peak Minerals Limited and INDIKA ENERGY 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 INDIKA ENERGY are associated (or correlated) with Peak Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peak Minerals Limited has no effect on the direction of INDIKA ENERGY i.e., INDIKA ENERGY and Peak Minerals go up and down completely randomly.
Pair Corralation between INDIKA ENERGY and Peak Minerals
Assuming the 90 days trading horizon INDIKA ENERGY is expected to under-perform the Peak Minerals. But the stock apears to be less risky and, when comparing its historical volatility, INDIKA ENERGY is 1.24 times less risky than Peak Minerals. The stock trades about -0.02 of its potential returns per unit of risk. The Peak Minerals Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 0.30 in Peak Minerals Limited on September 4, 2024 and sell it today you would earn a total of 0.00 from holding Peak Minerals Limited or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
INDIKA ENERGY vs. Peak Minerals Limited
Performance |
| Timeline |
| INDIKA ENERGY |
| Peak Minerals Limited |
INDIKA ENERGY and Peak Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDIKA ENERGY and Peak Minerals
The main advantage of trading using opposite INDIKA ENERGY and Peak Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDIKA ENERGY position performs unexpectedly, Peak Minerals 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 Minerals will offset losses from the drop in Peak Minerals' long position.| INDIKA ENERGY vs. TOTAL GABON | INDIKA ENERGY vs. Walgreens Boots Alliance | INDIKA ENERGY vs. Peak Resources Limited |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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