Correlation Between Standard Uranium and Peninsula Energy

Can any of the company-specific risk be diversified away by investing in both Standard Uranium and Peninsula Energy 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 Standard Uranium and Peninsula Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Standard Uranium and Peninsula Energy

0.28

Correlation Coefficient

Standard Uranium  Peninsula Energy

Modest diversification

The 3 months correlation between Standard and Peninsula is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Standard Uranium and Peninsula Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peninsula Energy and Standard Uranium 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 Standard Uranium are associated (or correlated) with Peninsula Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peninsula Energy has no effect on the direction of Standard Uranium i.e., Standard Uranium and Peninsula Energy go up and down completely randomly.

Pair Corralation between Standard Uranium and Peninsula Energy

Assuming the 90 days horizon Standard Uranium is expected to generate 1.41 times more return on investment than Peninsula Energy. However, Standard Uranium is 1.41 times more volatile than Peninsula Energy. It trades about 0.11 of its potential returns per unit of risk. Peninsula Energy is currently generating about -0.08 per unit of risk. If you would invest  3.75  in Standard Uranium on December 22, 2024 and sell it today you would earn a total of  1.58  from holding Standard Uranium or generate 42.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Standard Uranium  vs.  Peninsula Energy

Standard Uranium

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Standard Uranium are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Standard Uranium reported solid returns over the last few months and may actually be approaching a breakup point.

Peninsula Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Peninsula Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Standard Uranium and Peninsula Energy

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

The idea behind Standard Uranium and Peninsula Energy 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.