Correlation Between Aminex PLC and Petrus Resources

Can any of the company-specific risk be diversified away by investing in both Aminex PLC and Petrus 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 Aminex PLC and Petrus Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aminex PLC and Petrus Resources, you can compare the effects of market volatilities on Aminex PLC and Petrus 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 Aminex PLC with a short position of Petrus Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aminex PLC and Petrus Resources.

Diversification Opportunities for Aminex PLC and Petrus Resources

0.07

Correlation Coefficient

Aminex PLC  Petrus Resources

Significant diversification

The 3 months correlation between Aminex and Petrus is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Aminex PLC and Petrus Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrus Resources and Aminex PLC 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 Aminex PLC are associated (or correlated) with Petrus Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrus Resources has no effect on the direction of Aminex PLC i.e., Aminex PLC and Petrus Resources go up and down completely randomly.

Pair Corralation between Aminex PLC and Petrus Resources

Assuming the 90 days horizon Aminex PLC is expected to generate 9.81 times more return on investment than Petrus Resources. However, Aminex PLC is 9.81 times more volatile than Petrus Resources. It trades about 0.03 of its potential returns per unit of risk. Petrus Resources is currently generating about -0.06 per unit of risk. If you would invest  3.00  in Aminex PLC on November 20, 2024 and sell it today you would lose (0.95) from holding Aminex PLC or give up 31.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

Aminex PLC  vs.  Petrus Resources

Aminex PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aminex PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Aminex PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Petrus Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Petrus Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Aminex PLC and Petrus Resources

The main advantage of trading using opposite Aminex PLC and Petrus Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aminex PLC position performs unexpectedly, Petrus 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 Petrus Resources will offset losses from the drop in Petrus Resources' long position.

The idea behind Aminex PLC and Petrus Resources 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.