Correlation Between Maple Peak and Pentagon I

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

Diversification Opportunities for Maple Peak and Pentagon I

0.0

Correlation Coefficient

Maple Peak  Pentagon I

Pay attention - limited upside

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

Pair Corralation between Maple Peak and Pentagon I

Assuming the 90 days horizon Maple Peak Investments is expected to generate 1.55 times more return on investment than Pentagon I. However, Maple Peak is 1.55 times more volatile than Pentagon I Capital. It trades about 0.04 of its potential returns per unit of risk. Pentagon I Capital is currently generating about 0.01 per unit of risk. If you would invest  2.00  in Maple Peak Investments on October 13, 2024 and sell it today you would lose (1.00) from holding Maple Peak Investments or give up 50.0% of portfolio value over 90 days.

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

Maple Peak Investments  vs.  Pentagon I Capital

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.

Pentagon I Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pentagon I Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Maple Peak and Pentagon I

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

The idea behind Maple Peak Investments and Pentagon I Capital 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.