Correlation Between Peninsula and Atreyu Capital

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

By analyzing existing cross correlation between Peninsula Group and Atreyu Capital Markets, you can compare the effects of market volatilities on Peninsula and Atreyu Capital 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 Peninsula with a short position of Atreyu Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peninsula and Atreyu Capital.

Diversification Opportunities for Peninsula and Atreyu Capital

0.93

Correlation Coefficient

Peninsula  Atreyu Capital

Almost no diversification

The 3 months correlation between Peninsula and Atreyu is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Peninsula Group and Atreyu Capital Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atreyu Capital Markets and Peninsula 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 Peninsula Group are associated (or correlated) with Atreyu Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atreyu Capital Markets has no effect on the direction of Peninsula i.e., Peninsula and Atreyu Capital go up and down completely randomly.

Pair Corralation between Peninsula and Atreyu Capital

Assuming the 90 days trading horizon Peninsula Group is expected to generate 0.95 times more return on investment than Atreyu Capital. However, Peninsula Group is 1.06 times less risky than Atreyu Capital. It trades about 0.42 of its potential returns per unit of risk. Atreyu Capital Markets is currently generating about 0.36 per unit of risk. If you would invest  16,392  in Peninsula Group on September 15, 2024 and sell it today you would earn a total of  5,388  from holding Peninsula Group or generate 32.87% return on investment over 90 days.

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

Peninsula Group  vs.  Atreyu Capital Markets

Peninsula Group

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Peninsula Group are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Peninsula sustained solid returns over the last few months and may actually be approaching a breakup point.

Atreyu Capital Markets

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Atreyu Capital Markets are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Atreyu Capital sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Peninsula and Atreyu Capital

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

The idea behind Peninsula Group and Atreyu Capital Markets 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.