Correlation Between Peak Resources and GUDANG GARAM
Can any of the company-specific risk be diversified away by investing in both Peak Resources and GUDANG GARAM 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 GUDANG GARAM 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 GUDANG GARAM, you can compare the effects of market volatilities on Peak Resources and GUDANG GARAM 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 GUDANG GARAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peak Resources and GUDANG GARAM.
Diversification Opportunities for Peak Resources and GUDANG GARAM
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Peak and GUDANG is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Peak Resources Limited and GUDANG GARAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUDANG GARAM 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 GUDANG GARAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUDANG GARAM has no effect on the direction of Peak Resources i.e., Peak Resources and GUDANG GARAM go up and down completely randomly.
Pair Corralation between Peak Resources and GUDANG GARAM
Assuming the 90 days horizon Peak Resources Limited is expected to under-perform the GUDANG GARAM. In addition to that, Peak Resources is 10.21 times more volatile than GUDANG GARAM. It trades about -0.08 of its total potential returns per unit of risk. GUDANG GARAM is currently generating about -0.13 per unit of volatility. If you would invest 74.00 in GUDANG GARAM on September 5, 2024 and sell it today you would lose (3.00) from holding GUDANG GARAM or give up 4.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Peak Resources Limited vs. GUDANG GARAM
Performance |
| Timeline |
| Peak Resources |
| GUDANG GARAM |
Peak Resources and GUDANG GARAM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peak Resources and GUDANG GARAM
The main advantage of trading using opposite Peak Resources and GUDANG GARAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peak Resources position performs unexpectedly, GUDANG GARAM 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 GUDANG GARAM will offset losses from the drop in GUDANG GARAM's long position.| Peak Resources vs. BHP Group Limited | Peak Resources vs. Rio Tinto Group | Peak Resources vs. Glencore PLC | Peak Resources vs. ANGLO AMERICAN SPADR |
| GUDANG GARAM vs. TOTAL GABON | GUDANG GARAM vs. Walgreens Boots Alliance | GUDANG GARAM 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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