Correlation Between NTG Nordic and Peak Minerals

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

By analyzing existing cross correlation between NTG Nordic Transport and Peak Minerals Limited, you can compare the effects of market volatilities on NTG Nordic and Peak Minerals 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 NTG Nordic with a short position of Peak Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of NTG Nordic and Peak Minerals.

Diversification Opportunities for NTG Nordic and Peak Minerals

-0.7

Correlation Coefficient

NTG Nordic  Peak Minerals

Excellent diversification

The 3 months correlation between NTG and Peak is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and Peak Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peak Minerals Limited and NTG Nordic 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 NTG Nordic Transport are associated (or correlated) with Peak Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peak Minerals Limited has no effect on the direction of NTG Nordic i.e., NTG Nordic and Peak Minerals go up and down completely randomly.

Pair Corralation between NTG Nordic and Peak Minerals

Assuming the 90 days trading horizon NTG Nordic Transport is expected to under-perform the Peak Minerals. But the stock apears to be less risky and, when comparing its historical volatility, NTG Nordic Transport is 11.0 times less risky than Peak Minerals. The stock trades about -0.24 of its potential returns per unit of risk. The Peak Minerals Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.30  in Peak Minerals Limited on October 22, 2024 and sell it today you would earn a total of  0.20  from holding Peak Minerals Limited or generate 66.67% return on investment over 90 days.

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

NTG Nordic Transport  vs.  Peak Minerals Limited

NTG Nordic Transport

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NTG Nordic Transport has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Peak Minerals Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Peak Minerals Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Peak Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NTG Nordic and Peak Minerals

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

The idea behind NTG Nordic Transport and Peak Minerals Limited 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.