Correlation Between PepinNini Minerals and Metals Creek

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

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

Diversification Opportunities for PepinNini Minerals and Metals Creek

0.72

Correlation Coefficient

PepinNini Minerals  Metals Creek

Poor diversification

The 3 months correlation between PepinNini and Metals is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding PepinNini Minerals Limited and Metals Creek Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals Creek Resources and PepinNini Minerals 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 PepinNini Minerals Limited are associated (or correlated) with Metals Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals Creek Resources has no effect on the direction of PepinNini Minerals i.e., PepinNini Minerals and Metals Creek go up and down completely randomly.

Pair Corralation between PepinNini Minerals and Metals Creek

Assuming the 90 days horizon PepinNini Minerals is expected to generate 493.4 times less return on investment than Metals Creek. But when comparing it to its historical volatility, PepinNini Minerals Limited is 379.68 times less risky than Metals Creek. It trades about 0.13 of its potential returns per unit of risk. Metals Creek Resources is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Metals Creek Resources on September 12, 2024 and sell it today you would earn a total of  1.74  from holding Metals Creek Resources or generate 174.0% return on investment over 90 days.

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

PepinNini Minerals Limited  vs.  Metals Creek Resources

PepinNini Minerals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PepinNini Minerals Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, PepinNini Minerals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Metals Creek Resources

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metals Creek Resources are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Metals Creek reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PepinNini Minerals and Metals Creek

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

The idea behind PepinNini Minerals Limited and Metals Creek Resources 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.