Correlation Between PERENNIAL ENERGY and MONGOLIAN MINING

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

By analyzing existing cross correlation between PERENNIAL ENERGY HD 01 and MONGOLIAN MINING CRPREGS, you can compare the effects of market volatilities on PERENNIAL ENERGY and MONGOLIAN MINING 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 PERENNIAL ENERGY with a short position of MONGOLIAN MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of PERENNIAL ENERGY and MONGOLIAN MINING.

Diversification Opportunities for PERENNIAL ENERGY and MONGOLIAN MINING

0.49

Correlation Coefficient

PERENNIAL ENERGY  MONGOLIAN MINING

Very weak diversification

The 3 months correlation between PERENNIAL and MONGOLIAN is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding PERENNIAL ENERGY HD 01 and MONGOLIAN MINING CRPREGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MONGOLIAN MINING CRPREGS and PERENNIAL ENERGY 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 PERENNIAL ENERGY HD 01 are associated (or correlated) with MONGOLIAN MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MONGOLIAN MINING CRPREGS has no effect on the direction of PERENNIAL ENERGY i.e., PERENNIAL ENERGY and MONGOLIAN MINING go up and down completely randomly.

Pair Corralation between PERENNIAL ENERGY and MONGOLIAN MINING

Assuming the 90 days horizon PERENNIAL ENERGY HD 01 is expected to under-perform the MONGOLIAN MINING. In addition to that, PERENNIAL ENERGY is 1.1 times more volatile than MONGOLIAN MINING CRPREGS. It trades about -0.01 of its total potential returns per unit of risk. MONGOLIAN MINING CRPREGS is currently generating about -0.01 per unit of volatility. If you would invest  100.00  in MONGOLIAN MINING CRPREGS on September 25, 2024 and sell it today you would lose (14.00) from holding MONGOLIAN MINING CRPREGS or give up 14.0% of portfolio value over 90 days.

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

PERENNIAL ENERGY HD 01  vs.  MONGOLIAN MINING CRPREGS

PERENNIAL ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PERENNIAL ENERGY HD 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PERENNIAL ENERGY is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

MONGOLIAN MINING CRPREGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MONGOLIAN MINING CRPREGS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, MONGOLIAN MINING is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PERENNIAL ENERGY and MONGOLIAN MINING

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

The idea behind PERENNIAL ENERGY HD 01 and MONGOLIAN MINING CRPREGS 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.