Correlation Between Peel Mining and FireFly Metals
Can any of the company-specific risk be diversified away by investing in both Peel Mining and FireFly Metals 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 Peel Mining and FireFly Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peel Mining and FireFly Metals, you can compare the effects of market volatilities on Peel Mining and FireFly Metals 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 Peel Mining with a short position of FireFly Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peel Mining and FireFly Metals.
Diversification Opportunities for Peel Mining and FireFly Metals
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Peel and FireFly is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Peel Mining and FireFly Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FireFly Metals and Peel Mining 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 Peel Mining are associated (or correlated) with FireFly Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FireFly Metals has no effect on the direction of Peel Mining i.e., Peel Mining and FireFly Metals go up and down completely randomly.
Pair Corralation between Peel Mining and FireFly Metals
Assuming the 90 days trading horizon Peel Mining is expected to generate 0.79 times more return on investment than FireFly Metals. However, Peel Mining is 1.27 times less risky than FireFly Metals. It trades about -0.06 of its potential returns per unit of risk. FireFly Metals is currently generating about -0.11 per unit of risk. If you would invest 12.00 in Peel Mining on October 30, 2024 and sell it today you would lose (1.00) from holding Peel Mining or give up 8.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Peel Mining vs. FireFly Metals
Performance |
| Timeline |
| Peel Mining |
| FireFly Metals |
Peel Mining and FireFly Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peel Mining and FireFly Metals
The main advantage of trading using opposite Peel Mining and FireFly Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peel Mining position performs unexpectedly, FireFly Metals 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 FireFly Metals will offset losses from the drop in FireFly Metals' long position.| Peel Mining vs. Wt Financial Group | Peel Mining vs. Aristocrat Leisure | Peel Mining vs. Hotel Property Investments | Peel Mining vs. Meeka Metals Limited |
| FireFly Metals vs. Spirit Telecom | FireFly Metals vs. Sky Metals | FireFly Metals vs. Hutchison Telecommunications | FireFly Metals vs. Farm Pride Foods |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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