Correlation Between Peel Mining and BNK Banking

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

By analyzing existing cross correlation between Peel Mining and BNK Banking, you can compare the effects of market volatilities on Peel Mining and BNK Banking 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 BNK Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peel Mining and BNK Banking.

Diversification Opportunities for Peel Mining and BNK Banking

0.42

Correlation Coefficient

Peel Mining  BNK Banking

Very weak diversification

The 3 months correlation between Peel and BNK is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Peel Mining and BNK Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNK Banking 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 BNK Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNK Banking has no effect on the direction of Peel Mining i.e., Peel Mining and BNK Banking go up and down completely randomly.

Pair Corralation between Peel Mining and BNK Banking

If you would invest (100.00) in Peel Mining on October 9, 2024 and sell it today you would earn a total of  100.00  from holding Peel Mining or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.0%
Values	Daily Returns

Peel Mining  vs.  BNK Banking

Peel Mining

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Peel Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Peel Mining is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

BNK Banking

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BNK Banking has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Peel Mining and BNK Banking

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

The idea behind Peel Mining and BNK Banking 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.

Check out your portfolio center.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.