Correlation Between Peak Resources and OFFICE DEPOT

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

Diversification Opportunities for Peak Resources and OFFICE DEPOT

0.0

Correlation Coefficient

Peak Resources  OFFICE DEPOT

Pay attention - limited upside

The 3 months correlation between Peak and OFFICE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Peak Resources Limited and OFFICE DEPOT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFFICE DEPOT 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 OFFICE DEPOT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFFICE DEPOT has no effect on the direction of Peak Resources i.e., Peak Resources and OFFICE DEPOT go up and down completely randomly.

Pair Corralation between Peak Resources and OFFICE DEPOT

If you would invest  6.30  in Peak Resources Limited on December 28, 2024 and sell it today you would lose (0.80) from holding Peak Resources Limited or give up 12.7% of portfolio value over 90 days.

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

Peak Resources Limited  vs.  OFFICE DEPOT

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

OFFICE DEPOT

Risk-Adjusted Performance

Very Weak

Over the last 90 days OFFICE DEPOT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, OFFICE DEPOT is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Peak Resources and OFFICE DEPOT

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

The idea behind Peak Resources Limited and OFFICE DEPOT 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.