Correlation Between North Peak and Eline Entertainment

Can any of the company-specific risk be diversified away by investing in both North Peak and Eline Entertainment 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 North Peak and Eline Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for North Peak and Eline Entertainment

-0.36

Correlation Coefficient

North Peak  Eline Entertainment

Very good diversification

The 3 months correlation between North and Eline is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding North Peak Resources and Eline Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eline Entertainment and North Peak 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 North Peak Resources are associated (or correlated) with Eline Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eline Entertainment has no effect on the direction of North Peak i.e., North Peak and Eline Entertainment go up and down completely randomly.

Pair Corralation between North Peak and Eline Entertainment

Assuming the 90 days horizon North Peak Resources is expected to under-perform the Eline Entertainment. But the pink sheet apears to be less risky and, when comparing its historical volatility, North Peak Resources is 12.76 times less risky than Eline Entertainment. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Eline Entertainment Group is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Eline Entertainment Group on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Eline Entertainment Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

North Peak Resources  vs.  Eline Entertainment Group

North Peak Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days North Peak Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Eline Entertainment

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eline Entertainment Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, Eline Entertainment demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with North Peak and Eline Entertainment

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

The idea behind North Peak Resources and Eline Entertainment Group 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .