Correlation Between Peel Mining and Air New

Can any of the company-specific risk be diversified away by investing in both Peel Mining and Air New 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 Peel Mining and Air New into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Peel Mining and Air New Zealand, you can compare the effects of market volatilities on Peel Mining and Air New 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 Peel Mining with a short position of Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peel Mining and Air New.

Diversification Opportunities for Peel Mining and Air New

-0.27

Correlation Coefficient

Peel Mining  Air New

Very good diversification

The 3 months correlation between Peel and Air is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Peel Mining and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand and Peel Mining 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 Peel Mining are associated (or correlated) with Air New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of Peel Mining i.e., Peel Mining and Air New go up and down completely randomly.

Pair Corralation between Peel Mining and Air New

Assuming the 90 days trading horizon Peel Mining is expected to generate 3.66 times more return on investment than Air New. However, Peel Mining is 3.66 times more volatile than Air New Zealand. It trades about 0.0 of its potential returns per unit of risk. Air New Zealand is currently generating about -0.01 per unit of risk. If you would invest  20.00  in Peel Mining on October 4, 2024 and sell it today you would lose (8.00) from holding Peel Mining or give up 40.0% of portfolio value over 90 days.

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

Peel Mining  vs.  Air New Zealand

Peel Mining

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Peel Mining are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Peel Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Air New Zealand

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air New Zealand are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Air New may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Peel Mining and Air New

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

The idea behind Peel Mining and Air New Zealand 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.