Correlation Between Peak Resources and EAGLE MATERIALS

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

Diversification Opportunities for Peak Resources and EAGLE MATERIALS

-0.79

Correlation Coefficient

Peak Resources  EAGLE MATERIALS

Pay attention - limited upside

The 3 months correlation between Peak and EAGLE is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Peak Resources Limited and EAGLE MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAGLE MATERIALS 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 EAGLE MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAGLE MATERIALS has no effect on the direction of Peak Resources i.e., Peak Resources and EAGLE MATERIALS go up and down completely randomly.

Pair Corralation between Peak Resources and EAGLE MATERIALS

Assuming the 90 days horizon Peak Resources Limited is expected to under-perform the EAGLE MATERIALS. In addition to that, Peak Resources is 4.6 times more volatile than EAGLE MATERIALS. It trades about -0.04 of its total potential returns per unit of risk. EAGLE MATERIALS is currently generating about 0.22 per unit of volatility. If you would invest  22,178  in EAGLE MATERIALS on September 3, 2024 and sell it today you would earn a total of  7,022  from holding EAGLE MATERIALS or generate 31.66% return on investment over 90 days.

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

Peak Resources Limited  vs.  EAGLE MATERIALS

Peak Resources

Risk-Adjusted Performance

0 of 100

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 fragile performance in the last few months, the Stock's basic 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.

EAGLE MATERIALS

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EAGLE MATERIALS are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, EAGLE MATERIALS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Peak Resources and EAGLE MATERIALS

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

The idea behind Peak Resources Limited and EAGLE MATERIALS 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.