Correlation Between Maple Peak and Fjordland Exploration

Can any of the company-specific risk be diversified away by investing in both Maple Peak and Fjordland Exploration 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 Maple Peak and Fjordland Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Maple Peak Investments and Fjordland Exploration, you can compare the effects of market volatilities on Maple Peak and Fjordland Exploration 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 Maple Peak with a short position of Fjordland Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Peak and Fjordland Exploration.

Diversification Opportunities for Maple Peak and Fjordland Exploration

0.0

Correlation Coefficient

Maple Peak  Fjordland Exploration

Pay attention - limited upside

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

Pair Corralation between Maple Peak and Fjordland Exploration

Assuming the 90 days horizon Maple Peak Investments is expected to under-perform the Fjordland Exploration. But the stock apears to be less risky and, when comparing its historical volatility, Maple Peak Investments is 1.35 times less risky than Fjordland Exploration. The stock trades about 0.0 of its potential returns per unit of risk. The Fjordland Exploration is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Fjordland Exploration on October 7, 2024 and sell it today you would lose (1.00) from holding Fjordland Exploration or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Maple Peak Investments  vs.  Fjordland Exploration

Maple Peak Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maple Peak Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Maple Peak is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Fjordland Exploration

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fjordland Exploration are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Fjordland Exploration showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maple Peak and Fjordland Exploration

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

The idea behind Maple Peak Investments and Fjordland Exploration 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.