Correlation Between ValOre Metals and Peninsula Energy

Can any of the company-specific risk be diversified away by investing in both ValOre Metals and Peninsula Energy 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 ValOre Metals and Peninsula Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ValOre Metals Corp and Peninsula Energy, you can compare the effects of market volatilities on ValOre Metals and Peninsula Energy 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 ValOre Metals with a short position of Peninsula Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ValOre Metals and Peninsula Energy.

Diversification Opportunities for ValOre Metals and Peninsula Energy

0.39

Correlation Coefficient

ValOre Metals  Peninsula Energy

Weak diversification

The 3 months correlation between ValOre and Peninsula is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding ValOre Metals Corp and Peninsula Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peninsula Energy and ValOre Metals 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 ValOre Metals Corp are associated (or correlated) with Peninsula Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peninsula Energy has no effect on the direction of ValOre Metals i.e., ValOre Metals and Peninsula Energy go up and down completely randomly.

Pair Corralation between ValOre Metals and Peninsula Energy

Assuming the 90 days horizon ValOre Metals Corp is expected to generate 0.89 times more return on investment than Peninsula Energy. However, ValOre Metals Corp is 1.12 times less risky than Peninsula Energy. It trades about -0.01 of its potential returns per unit of risk. Peninsula Energy is currently generating about -0.1 per unit of risk. If you would invest  5.55  in ValOre Metals Corp on December 30, 2024 and sell it today you would lose (0.76) from holding ValOre Metals Corp or give up 13.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ValOre Metals Corp  vs.  Peninsula Energy

ValOre Metals Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days ValOre Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ValOre Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Peninsula Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Peninsula Energy 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 primary indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ValOre Metals and Peninsula Energy

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

The idea behind ValOre Metals Corp and Peninsula Energy 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.