Correlation Between Palamina Corp and Peloton Minerals

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

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

Diversification Opportunities for Palamina Corp and Peloton Minerals

-0.16

Correlation Coefficient

Palamina Corp  Peloton Minerals

Good diversification

The 3 months correlation between Palamina and Peloton is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Palamina Corp and Peloton Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peloton Minerals and Palamina Corp 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 Palamina Corp are associated (or correlated) with Peloton Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peloton Minerals has no effect on the direction of Palamina Corp i.e., Palamina Corp and Peloton Minerals go up and down completely randomly.

Pair Corralation between Palamina Corp and Peloton Minerals

Assuming the 90 days horizon Palamina Corp is expected to under-perform the Peloton Minerals. But the otc stock apears to be less risky and, when comparing its historical volatility, Palamina Corp is 1.08 times less risky than Peloton Minerals. The otc stock trades about -0.2 of its potential returns per unit of risk. The Peloton Minerals is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  4.99  in Peloton Minerals on September 2, 2024 and sell it today you would earn a total of  1.21  from holding Peloton Minerals or generate 24.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Palamina Corp  vs.  Peloton Minerals

Palamina Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Peloton Minerals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Peloton Minerals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Peloton Minerals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Palamina Corp and Peloton Minerals

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

The idea behind Palamina Corp and Peloton Minerals 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.