Correlation Between Peninsula Energy and Alligator Energy
Can any of the company-specific risk be diversified away by investing in both Peninsula Energy and Alligator 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 Peninsula Energy and Alligator Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peninsula Energy and Alligator Energy Limited, you can compare the effects of market volatilities on Peninsula Energy and Alligator 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 Peninsula Energy with a short position of Alligator Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peninsula Energy and Alligator Energy.
Diversification Opportunities for Peninsula Energy and Alligator Energy
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Peninsula and Alligator is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Peninsula Energy and Alligator Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alligator Energy and Peninsula Energy 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 Peninsula Energy are associated (or correlated) with Alligator Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alligator Energy has no effect on the direction of Peninsula Energy i.e., Peninsula Energy and Alligator Energy go up and down completely randomly.
Pair Corralation between Peninsula Energy and Alligator Energy
Assuming the 90 days horizon Peninsula Energy is expected to generate 36.86 times more return on investment than Alligator Energy. However, Peninsula Energy is 36.86 times more volatile than Alligator Energy Limited. It trades about 0.23 of its potential returns per unit of risk. Alligator Energy Limited is currently generating about 0.06 per unit of risk. If you would invest 6.35 in Peninsula Energy on September 1, 2024 and sell it today you would earn a total of 72.65 from holding Peninsula Energy or generate 1144.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.26% |
| Values | Daily Returns |
Peninsula Energy vs. Alligator Energy Limited
Performance |
| Timeline |
| Peninsula Energy |
| Alligator Energy |
Peninsula Energy and Alligator Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peninsula Energy and Alligator Energy
The main advantage of trading using opposite Peninsula Energy and Alligator Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peninsula Energy position performs unexpectedly, Alligator 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 Alligator Energy will offset losses from the drop in Alligator Energy's long position.| Peninsula Energy vs. Deep Yellow | Peninsula Energy vs. Baselode Energy Corp | Peninsula Energy vs. Paladin Energy | Peninsula Energy vs. Elevate Uranium |
| Alligator Energy vs. ATT Inc | Alligator Energy vs. Merck Company | Alligator Energy vs. Walt Disney | Alligator Energy vs. Caterpillar |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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