Correlation Between Peel Mining and ENGIE Eps

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

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

Diversification Opportunities for Peel Mining and ENGIE Eps

0.62

Correlation Coefficient

Peel Mining  ENGIE Eps

Poor diversification

The 3 months correlation between Peel and ENGIE is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Peel Mining Limited and ENGIE Eps SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENGIE Eps SA 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 Limited are associated (or correlated) with ENGIE Eps. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENGIE Eps SA has no effect on the direction of Peel Mining i.e., Peel Mining and ENGIE Eps go up and down completely randomly.

Pair Corralation between Peel Mining and ENGIE Eps

Assuming the 90 days horizon Peel Mining Limited is expected to generate 9.66 times more return on investment than ENGIE Eps. However, Peel Mining is 9.66 times more volatile than ENGIE Eps SA. It trades about 0.03 of its potential returns per unit of risk. ENGIE Eps SA is currently generating about -0.04 per unit of risk. If you would invest  6.85  in Peel Mining Limited on September 27, 2024 and sell it today you would earn a total of  0.10  from holding Peel Mining Limited or generate 1.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	78.57%
Values	Daily Returns

Peel Mining Limited  vs.  ENGIE Eps SA

Peel Mining Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Peel Mining Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Peel Mining reported solid returns over the last few months and may actually be approaching a breakup point.

ENGIE Eps SA

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days ENGIE Eps SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, ENGIE Eps reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Peel Mining and ENGIE Eps

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

The idea behind Peel Mining Limited and ENGIE Eps SA 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.