Correlation Between Peak Resources and INDIKA ENERGY
Can any of the company-specific risk be diversified away by investing in both Peak Resources and INDIKA ENERGY 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 INDIKA ENERGY 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 INDIKA ENERGY, you can compare the effects of market volatilities on Peak Resources and INDIKA ENERGY 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 INDIKA ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peak Resources and INDIKA ENERGY.
Diversification Opportunities for Peak Resources and INDIKA ENERGY
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Peak and INDIKA is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Peak Resources Limited and INDIKA ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDIKA ENERGY 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 INDIKA ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDIKA ENERGY has no effect on the direction of Peak Resources i.e., Peak Resources and INDIKA ENERGY go up and down completely randomly.
Pair Corralation between Peak Resources and INDIKA ENERGY
Assuming the 90 days horizon Peak Resources Limited is expected to under-perform the INDIKA ENERGY. In addition to that, Peak Resources is 1.47 times more volatile than INDIKA ENERGY. It trades about -0.01 of its total potential returns per unit of risk. INDIKA ENERGY is currently generating about -0.01 per unit of volatility. If you would invest 16.00 in INDIKA ENERGY on September 12, 2024 and sell it today you would lose (8.15) from holding INDIKA ENERGY or give up 50.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Peak Resources Limited vs. INDIKA ENERGY
Performance |
| Timeline |
| Peak Resources |
| INDIKA ENERGY |
Peak Resources and INDIKA ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peak Resources and INDIKA ENERGY
The main advantage of trading using opposite Peak Resources and INDIKA ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peak Resources position performs unexpectedly, INDIKA ENERGY 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 INDIKA ENERGY will offset losses from the drop in INDIKA ENERGY's long position.| Peak Resources vs. NEWELL RUBBERMAID | Peak Resources vs. The Yokohama Rubber | Peak Resources vs. Hyster Yale Materials Handling | Peak Resources vs. Park Hotels Resorts |
| INDIKA ENERGY vs. Apple Inc | INDIKA ENERGY vs. Apple Inc | INDIKA ENERGY vs. Apple Inc | INDIKA ENERGY vs. Apple Inc |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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