Correlation Between Peak Resources and KINGBOARD CHEMICAL

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

Diversification Opportunities for Peak Resources and KINGBOARD CHEMICAL

-0.33

Correlation Coefficient

Peak Resources  KINGBOARD CHEMICAL

Very good diversification

The 3 months correlation between Peak and KINGBOARD is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Peak Resources Limited and KINGBOARD CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINGBOARD CHEMICAL has no effect on the direction of Peak Resources i.e., Peak Resources and KINGBOARD CHEMICAL go up and down completely randomly.

Pair Corralation between Peak Resources and KINGBOARD CHEMICAL

Assuming the 90 days horizon Peak Resources is expected to generate 1.9 times less return on investment than KINGBOARD CHEMICAL. In addition to that, Peak Resources is 2.76 times more volatile than KINGBOARD CHEMICAL. It trades about 0.02 of its total potential returns per unit of risk. KINGBOARD CHEMICAL is currently generating about 0.1 per unit of volatility. If you would invest  234.00  in KINGBOARD CHEMICAL on December 30, 2024 and sell it today you would earn a total of  38.00  from holding KINGBOARD CHEMICAL or generate 16.24% return on investment over 90 days.

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

Peak Resources Limited  vs.  KINGBOARD CHEMICAL

Peak Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Peak Resources Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Peak Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

KINGBOARD CHEMICAL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KINGBOARD CHEMICAL are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, KINGBOARD CHEMICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Peak Resources and KINGBOARD CHEMICAL

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

The idea behind Peak Resources Limited and KINGBOARD CHEMICAL 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 Stocks Directory module to find actively traded stocks across global markets.