Correlation Between Lyxor 1 and Peak Resources

Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and Peak 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 Lyxor 1 and Peak Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lyxor 1 and Peak Resources Limited, you can compare the effects of market volatilities on Lyxor 1 and Peak 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 Lyxor 1 with a short position of Peak Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and Peak Resources.

Diversification Opportunities for Lyxor 1 and Peak Resources

-0.33

Correlation Coefficient

Lyxor 1  Peak Resources

Very good diversification

The 3 months correlation between Lyxor and Peak is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and Peak Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peak Resources and Lyxor 1 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 Lyxor 1 are associated (or correlated) with Peak Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peak Resources has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and Peak Resources go up and down completely randomly.

Pair Corralation between Lyxor 1 and Peak Resources

Assuming the 90 days trading horizon Lyxor 1 is expected to generate 0.1 times more return on investment than Peak Resources. However, Lyxor 1 is 10.22 times less risky than Peak Resources. It trades about 0.06 of its potential returns per unit of risk. Peak Resources Limited is currently generating about -0.04 per unit of risk. If you would invest  2,415  in Lyxor 1 on September 3, 2024 and sell it today you would earn a total of  84.00  from holding Lyxor 1 or generate 3.48% return on investment over 90 days.

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

Lyxor 1   vs.  Peak Resources Limited

Lyxor 1

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor 1 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Lyxor 1 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Peak Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Peak Resources Limited 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 basic 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.

Pair Trading with Lyxor 1 and Peak Resources

The main advantage of trading using opposite Lyxor 1 and Peak Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, Peak 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 Peak Resources will offset losses from the drop in Peak Resources' long position.

The idea behind Lyxor 1 and Peak Resources Limited 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.