Correlation Between Transport International and Peak Minerals
Can any of the company-specific risk be diversified away by investing in both Transport International 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 Transport International and Peak Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transport International Holdings and Peak Minerals Limited, you can compare the effects of market volatilities on Transport International 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 Transport International with a short position of Peak Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport International and Peak Minerals.
Diversification Opportunities for Transport International and Peak Minerals
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Transport and Peak is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin 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 Transport International 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 Transport International Holdings 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 Transport International i.e., Transport International and Peak Minerals go up and down completely randomly.
Pair Corralation between Transport International and Peak Minerals
Assuming the 90 days horizon Transport International Holdings is expected to generate 0.06 times more return on investment than Peak Minerals. However, Transport International Holdings is 16.34 times less risky than Peak Minerals. It trades about 0.14 of its potential returns per unit of risk. Peak Minerals Limited is currently generating about -0.14 per unit of risk. If you would invest 93.00 in Transport International Holdings on December 4, 2024 and sell it today you would earn a total of 2.00 from holding Transport International Holdings or generate 2.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transport International Holdin vs. Peak Minerals Limited
Performance |
| Timeline |
| Transport International |
| Peak Minerals Limited |
Transport International and Peak Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transport International and Peak Minerals
The main advantage of trading using opposite Transport International and Peak Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transport International 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.The idea behind Transport International Holdings and Peak Minerals 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.
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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