Correlation Between Peak Resources and Macmahon Holdings
Can any of the company-specific risk be diversified away by investing in both Peak Resources and Macmahon Holdings 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 Macmahon Holdings 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 Macmahon Holdings Limited, you can compare the effects of market volatilities on Peak Resources and Macmahon Holdings 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 Macmahon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peak Resources and Macmahon Holdings.
Diversification Opportunities for Peak Resources and Macmahon Holdings
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Peak and Macmahon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Peak Resources Limited and Macmahon Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macmahon Holdings 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 Macmahon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macmahon Holdings has no effect on the direction of Peak Resources i.e., Peak Resources and Macmahon Holdings go up and down completely randomly.
Pair Corralation between Peak Resources and Macmahon Holdings
Assuming the 90 days horizon Peak Resources Limited is expected to generate 12.47 times more return on investment than Macmahon Holdings. However, Peak Resources is 12.47 times more volatile than Macmahon Holdings Limited. It trades about 0.05 of its potential returns per unit of risk. Macmahon Holdings Limited is currently generating about 0.11 per unit of risk. If you would invest 34.00 in Peak Resources Limited on August 26, 2024 and sell it today you would lose (21.00) from holding Peak Resources Limited or give up 61.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 65.74% |
| Values | Daily Returns |
Peak Resources Limited vs. Macmahon Holdings Limited
Performance |
| Timeline |
| Peak Resources |
| Macmahon Holdings |
Peak Resources and Macmahon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peak Resources and Macmahon Holdings
The main advantage of trading using opposite Peak Resources and Macmahon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peak Resources position performs unexpectedly, Macmahon Holdings 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 Macmahon Holdings will offset losses from the drop in Macmahon Holdings' long position.| Peak Resources vs. Greenland Minerals And | Peak Resources vs. Arizona Lithium Limited | Peak Resources vs. Arafura Resources | Peak Resources vs. Green Technology Metals |
| Macmahon Holdings vs. Celsius Holdings | Macmahon Holdings vs. Diageo PLC ADR | Macmahon Holdings vs. Oatly Group AB | Macmahon Holdings vs. Shake Shack |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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