Correlation Between Peak Resources and BROADWIND ENRGY

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

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

Diversification Opportunities for Peak Resources and BROADWIND ENRGY

0.85

Correlation Coefficient

Peak Resources  BROADWIND ENRGY

Very poor diversification

The 3 months correlation between Peak and BROADWIND is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Peak Resources Limited and BROADWIND ENRGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROADWIND ENRGY and Peak Resources 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 Peak Resources Limited are associated (or correlated) with BROADWIND ENRGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROADWIND ENRGY has no effect on the direction of Peak Resources i.e., Peak Resources and BROADWIND ENRGY go up and down completely randomly.

Pair Corralation between Peak Resources and BROADWIND ENRGY

Assuming the 90 days horizon Peak Resources Limited is expected to under-perform the BROADWIND ENRGY. In addition to that, Peak Resources is 2.28 times more volatile than BROADWIND ENRGY. It trades about -0.04 of its total potential returns per unit of risk. BROADWIND ENRGY is currently generating about -0.04 per unit of volatility. If you would invest  197.00  in BROADWIND ENRGY on September 12, 2024 and sell it today you would lose (29.00) from holding BROADWIND ENRGY or give up 14.72% of portfolio value over 90 days.

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

Peak Resources Limited  vs.  BROADWIND ENRGY

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 uncertain 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.

BROADWIND ENRGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BROADWIND ENRGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Peak Resources and BROADWIND ENRGY

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

The idea behind Peak Resources Limited and BROADWIND ENRGY 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.