Correlation Between Peninsula Energy and Sprott Physical

Can any of the company-specific risk be diversified away by investing in both Peninsula Energy and Sprott Physical 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 Peninsula Energy and Sprott Physical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Peninsula Energy and Sprott Physical Uranium, you can compare the effects of market volatilities on Peninsula Energy and Sprott Physical 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 Peninsula Energy with a short position of Sprott Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peninsula Energy and Sprott Physical.

Diversification Opportunities for Peninsula Energy and Sprott Physical

-0.25

Correlation Coefficient

Peninsula Energy  Sprott Physical

Very good diversification

The 3 months correlation between Peninsula and Sprott is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Peninsula Energy and Sprott Physical Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Uranium and Peninsula Energy 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 Peninsula Energy are associated (or correlated) with Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Uranium has no effect on the direction of Peninsula Energy i.e., Peninsula Energy and Sprott Physical go up and down completely randomly.

Pair Corralation between Peninsula Energy and Sprott Physical

Assuming the 90 days horizon Peninsula Energy is expected to generate 55.69 times more return on investment than Sprott Physical. However, Peninsula Energy is 55.69 times more volatile than Sprott Physical Uranium. It trades about 0.12 of its potential returns per unit of risk. Sprott Physical Uranium is currently generating about 0.01 per unit of risk. If you would invest  6.30  in Peninsula Energy on September 12, 2024 and sell it today you would earn a total of  65.70  from holding Peninsula Energy or generate 1042.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Peninsula Energy  vs.  Sprott Physical Uranium

Peninsula Energy

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Peninsula Energy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Peninsula Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Sprott Physical Uranium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Physical Uranium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sprott Physical is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Peninsula Energy and Sprott Physical

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

The idea behind Peninsula Energy and Sprott Physical Uranium 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.