Correlation Between Peel Mining and Vulcan Steel

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

By analyzing existing cross correlation between Peel Mining and Vulcan Steel, you can compare the effects of market volatilities on Peel Mining and Vulcan Steel 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 Peel Mining with a short position of Vulcan Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peel Mining and Vulcan Steel.

Diversification Opportunities for Peel Mining and Vulcan Steel

0.11

Correlation Coefficient

Peel Mining  Vulcan Steel

Average diversification

The 3 months correlation between Peel and Vulcan is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Peel Mining and Vulcan Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Steel and Peel Mining 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 Peel Mining are associated (or correlated) with Vulcan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Steel has no effect on the direction of Peel Mining i.e., Peel Mining and Vulcan Steel go up and down completely randomly.

Pair Corralation between Peel Mining and Vulcan Steel

Assuming the 90 days trading horizon Peel Mining is expected to under-perform the Vulcan Steel. In addition to that, Peel Mining is 1.11 times more volatile than Vulcan Steel. It trades about -0.04 of its total potential returns per unit of risk. Vulcan Steel is currently generating about 0.02 per unit of volatility. If you would invest  759.00  in Vulcan Steel on September 27, 2024 and sell it today you would earn a total of  4.00  from holding Vulcan Steel or generate 0.53% return on investment over 90 days.

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

Peel Mining  vs.  Vulcan Steel

Peel Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Peel Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Peel Mining is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Vulcan Steel

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Steel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Vulcan Steel is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Peel Mining and Vulcan Steel

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

The idea behind Peel Mining and Vulcan Steel 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.