Correlation Between Macmahon Holdings and Peak Resources

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Can any of the company-specific risk be diversified away by investing in both Macmahon Holdings and Peak Resources 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 Macmahon Holdings and Peak Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macmahon Holdings Limited and Peak Resources Limited, you can compare the effects of market volatilities on Macmahon Holdings and Peak Resources 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 Macmahon Holdings with a short position of Peak Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macmahon Holdings and Peak Resources.

Diversification Opportunities for Macmahon Holdings and Peak Resources

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Macmahon and Peak is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Macmahon Holdings Limited and Peak Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peak Resources and Macmahon Holdings 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 Macmahon Holdings Limited are associated (or correlated) with Peak Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peak Resources has no effect on the direction of Macmahon Holdings i.e., Macmahon Holdings and Peak Resources go up and down completely randomly.

Pair Corralation between Macmahon Holdings and Peak Resources

If you would invest  13.00  in Peak Resources Limited on August 26, 2024 and sell it today you would earn a total of  0.00  from holding Peak Resources Limited or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Macmahon Holdings Limited  vs.  Peak Resources Limited

 Performance 
       Timeline  
Macmahon Holdings 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Macmahon Holdings Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical indicators, Macmahon Holdings reported solid returns over the last few months and may actually be approaching a breakup point.
Peak Resources 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Peak Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Peak Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Macmahon Holdings and Peak Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Macmahon Holdings and Peak Resources

The main advantage of trading using opposite Macmahon Holdings and Peak Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macmahon Holdings position performs unexpectedly, Peak Resources 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 Resources will offset losses from the drop in Peak Resources' long position.
The idea behind Macmahon Holdings Limited and Peak Resources 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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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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