Correlation Between Broadpeak and Mauna Kea

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

Diversification Opportunities for Broadpeak and Mauna Kea

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Broadpeak and Mauna is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Broadpeak SA and Mauna Kea Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mauna Kea Technologies and Broadpeak 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 Broadpeak SA are associated (or correlated) with Mauna Kea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mauna Kea Technologies has no effect on the direction of Broadpeak i.e., Broadpeak and Mauna Kea go up and down completely randomly.

Pair Corralation between Broadpeak and Mauna Kea

Assuming the 90 days trading horizon Broadpeak SA is expected to generate 0.6 times more return on investment than Mauna Kea. However, Broadpeak SA is 1.67 times less risky than Mauna Kea. It trades about -0.07 of its potential returns per unit of risk. Mauna Kea Technologies is currently generating about -0.13 per unit of risk. If you would invest  114.00  in Broadpeak SA on October 24, 2024 and sell it today you would lose (15.00) from holding Broadpeak SA or give up 13.16% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Broadpeak SA  vs.  Mauna Kea Technologies

 Performance 
       Timeline  
Broadpeak SA 

Risk-Adjusted Performance

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Strong
Very Weak
Over the last 90 days Broadpeak SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.
Mauna Kea Technologies 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mauna Kea Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Broadpeak and Mauna Kea Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Broadpeak and Mauna Kea

The main advantage of trading using opposite Broadpeak and Mauna Kea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadpeak position performs unexpectedly, Mauna Kea 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 Mauna Kea will offset losses from the drop in Mauna Kea's long position.
The idea behind Broadpeak SA and Mauna Kea Technologies 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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