Correlation Between Peak Resources and MSAD INSURANCE

Can any of the company-specific risk be diversified away by investing in both Peak Resources and MSAD INSURANCE 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 MSAD INSURANCE 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 MSAD INSURANCE, you can compare the effects of market volatilities on Peak Resources and MSAD INSURANCE 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 MSAD INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peak Resources and MSAD INSURANCE.

Diversification Opportunities for Peak Resources and MSAD INSURANCE

-0.44

Correlation Coefficient

Peak Resources  MSAD INSURANCE

Very good diversification

The 3 months correlation between Peak and MSAD is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Peak Resources Limited and MSAD INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSAD INSURANCE 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 MSAD INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSAD INSURANCE has no effect on the direction of Peak Resources i.e., Peak Resources and MSAD INSURANCE go up and down completely randomly.

Pair Corralation between Peak Resources and MSAD INSURANCE

Assuming the 90 days horizon Peak Resources Limited is expected to generate 6.43 times more return on investment than MSAD INSURANCE. However, Peak Resources is 6.43 times more volatile than MSAD INSURANCE. It trades about 0.01 of its potential returns per unit of risk. MSAD INSURANCE is currently generating about 0.02 per unit of risk. If you would invest  5.90  in Peak Resources Limited on December 25, 2024 and sell it today you would lose (0.70) from holding Peak Resources Limited or give up 11.86% of portfolio value over 90 days.

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

Peak Resources Limited  vs.  MSAD INSURANCE

Peak Resources

Risk-Adjusted Performance

Very Weak

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

MSAD INSURANCE

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MSAD INSURANCE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, MSAD INSURANCE is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Peak Resources and MSAD INSURANCE

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

The idea behind Peak Resources Limited and MSAD INSURANCE 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.