Correlation Between Pekin Life and Collective Mining

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

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

Diversification Opportunities for Pekin Life and Collective Mining

0.51

Correlation Coefficient

Pekin Life  Collective Mining

Very weak diversification

The 3 months correlation between Pekin and Collective is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Pekin Life Insurance and Collective Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collective Mining and Pekin Life 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 Pekin Life Insurance are associated (or correlated) with Collective Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collective Mining has no effect on the direction of Pekin Life i.e., Pekin Life and Collective Mining go up and down completely randomly.

Pair Corralation between Pekin Life and Collective Mining

Given the investment horizon of 90 days Pekin Life is expected to generate 17.39 times less return on investment than Collective Mining. But when comparing it to its historical volatility, Pekin Life Insurance is 11.93 times less risky than Collective Mining. It trades about 0.14 of its potential returns per unit of risk. Collective Mining is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  315.00  in Collective Mining on October 10, 2024 and sell it today you would earn a total of  134.00  from holding Collective Mining or generate 42.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Pekin Life Insurance  vs.  Collective Mining

Pekin Life Insurance

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pekin Life Insurance are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Pekin Life is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Collective Mining

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Collective Mining are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Collective Mining disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pekin Life and Collective Mining

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

The idea behind Pekin Life Insurance and Collective Mining 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.