Correlation Between Peak Resources and G8 EDUCATION
Can any of the company-specific risk be diversified away by investing in both Peak Resources and G8 EDUCATION 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 Peak Resources and G8 EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peak Resources Limited and G8 EDUCATION, you can compare the effects of market volatilities on Peak Resources and G8 EDUCATION 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 Peak Resources with a short position of G8 EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peak Resources and G8 EDUCATION.
Diversification Opportunities for Peak Resources and G8 EDUCATION
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Peak and 3EAG is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Peak Resources Limited and G8 EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G8 EDUCATION and Peak 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 Peak Resources Limited are associated (or correlated) with G8 EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G8 EDUCATION has no effect on the direction of Peak Resources i.e., Peak Resources and G8 EDUCATION go up and down completely randomly.
Pair Corralation between Peak Resources and G8 EDUCATION
Assuming the 90 days horizon Peak Resources Limited is expected to under-perform the G8 EDUCATION. In addition to that, Peak Resources is 8.13 times more volatile than G8 EDUCATION. It trades about -0.09 of its total potential returns per unit of risk. G8 EDUCATION is currently generating about 0.04 per unit of volatility. If you would invest 79.00 in G8 EDUCATION on September 4, 2024 and sell it today you would earn a total of 1.00 from holding G8 EDUCATION or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Peak Resources Limited vs. G8 EDUCATION
Performance |
| Timeline |
| Peak Resources |
| G8 EDUCATION |
Peak Resources and G8 EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peak Resources and G8 EDUCATION
The main advantage of trading using opposite Peak Resources and G8 EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peak Resources position performs unexpectedly, G8 EDUCATION 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 G8 EDUCATION will offset losses from the drop in G8 EDUCATION's long position.| Peak Resources vs. BHP Group Limited | Peak Resources vs. Rio Tinto Group | Peak Resources vs. Vale SA | Peak Resources vs. Glencore plc |
| G8 EDUCATION vs. TOTAL GABON | G8 EDUCATION vs. Walgreens Boots Alliance | G8 EDUCATION vs. Peak Resources Limited |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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