Correlation Between PepinNini Minerals and CAT Strategic

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

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

Diversification Opportunities for PepinNini Minerals and CAT Strategic

-0.45

Correlation Coefficient

PepinNini Minerals  CAT Strategic

Very good diversification

The 3 months correlation between PepinNini and CAT is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding PepinNini Minerals Limited and CAT Strategic Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAT Strategic Metals and PepinNini Minerals 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 PepinNini Minerals Limited are associated (or correlated) with CAT Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAT Strategic Metals has no effect on the direction of PepinNini Minerals i.e., PepinNini Minerals and CAT Strategic go up and down completely randomly.

Pair Corralation between PepinNini Minerals and CAT Strategic

Assuming the 90 days horizon PepinNini Minerals is expected to generate 188.58 times less return on investment than CAT Strategic. But when comparing it to its historical volatility, PepinNini Minerals Limited is 427.53 times less risky than CAT Strategic. It trades about 0.13 of its potential returns per unit of risk. CAT Strategic Metals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.43  in CAT Strategic Metals on September 4, 2024 and sell it today you would lose (0.27) from holding CAT Strategic Metals or give up 62.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.92%
Values	Daily Returns

PepinNini Minerals Limited  vs.  CAT Strategic Metals

PepinNini Minerals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PepinNini Minerals Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, PepinNini Minerals is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

CAT Strategic Metals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CAT Strategic Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CAT Strategic reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PepinNini Minerals and CAT Strategic

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

The idea behind PepinNini Minerals Limited and CAT Strategic Metals 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.