Correlation Between North Peak and Mene

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

By analyzing existing cross correlation between North Peak Resources and Mene Inc, you can compare the effects of market volatilities on North Peak and Mene 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 North Peak with a short position of Mene. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Peak and Mene.

Diversification Opportunities for North Peak and Mene

0.48

Correlation Coefficient

North Peak  Mene

Very weak diversification

The 3 months correlation between North and Mene is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding North Peak Resources and Mene Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mene Inc and North Peak 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 North Peak Resources are associated (or correlated) with Mene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mene Inc has no effect on the direction of North Peak i.e., North Peak and Mene go up and down completely randomly.

Pair Corralation between North Peak and Mene

Assuming the 90 days horizon North Peak Resources is expected to under-perform the Mene. In addition to that, North Peak is 1.24 times more volatile than Mene Inc. It trades about -0.05 of its total potential returns per unit of risk. Mene Inc is currently generating about 0.01 per unit of volatility. If you would invest  9.00  in Mene Inc on September 12, 2024 and sell it today you would lose (0.40) from holding Mene Inc or give up 4.44% of portfolio value over 90 days.

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

North Peak Resources  vs.  Mene Inc

North Peak Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days North Peak Resources 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 essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Mene Inc

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mene Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Mene is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with North Peak and Mene

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

The idea behind North Peak Resources and Mene Inc 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.