Correlation Between Pinnacle Investment and Lake Resources
Can any of the company-specific risk be diversified away by investing in both Pinnacle Investment and Lake Resources 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 Pinnacle Investment and Lake Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pinnacle Investment Management and Lake Resources NL, you can compare the effects of market volatilities on Pinnacle Investment and Lake Resources 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 Pinnacle Investment with a short position of Lake Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinnacle Investment and Lake Resources.
Diversification Opportunities for Pinnacle Investment and Lake Resources
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pinnacle and Lake is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Pinnacle Investment Management and Lake Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Resources NL and Pinnacle Investment 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 Pinnacle Investment Management are associated (or correlated) with Lake Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lake Resources NL has no effect on the direction of Pinnacle Investment i.e., Pinnacle Investment and Lake Resources go up and down completely randomly.
Pair Corralation between Pinnacle Investment and Lake Resources
Assuming the 90 days trading horizon Pinnacle Investment Management is expected to under-perform the Lake Resources. But the stock apears to be less risky and, when comparing its historical volatility, Pinnacle Investment Management is 1.78 times less risky than Lake Resources. The stock trades about -0.29 of its potential returns per unit of risk. The Lake Resources NL is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 3.90 in Lake Resources NL on December 5, 2024 and sell it today you would lose (0.60) from holding Lake Resources NL or give up 15.38% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.65% |
Values | Daily Returns |
Pinnacle Investment Management vs. Lake Resources NL
Performance |
Timeline |
Pinnacle Investment |
Lake Resources NL |
Pinnacle Investment and Lake Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pinnacle Investment and Lake Resources
The main advantage of trading using opposite Pinnacle Investment and Lake Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinnacle Investment position performs unexpectedly, Lake Resources 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 Lake Resources will offset losses from the drop in Lake Resources' long position.Pinnacle Investment vs. Phoslock Environmental Technologies | Pinnacle Investment vs. Qbe Insurance Group | Pinnacle Investment vs. Pearl Gull Iron | Pinnacle Investment vs. Westpac Banking |
Lake Resources vs. EROAD | Lake Resources vs. Retail Food Group | Lake Resources vs. Qbe Insurance Group | Lake Resources vs. Macquarie Bank Limited |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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