Correlation Between Peloton Minerals and Cerrado Gold

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

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

Diversification Opportunities for Peloton Minerals and Cerrado Gold

-0.49

Correlation Coefficient

Peloton Minerals  Cerrado Gold

Very good diversification

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

Pair Corralation between Peloton Minerals and Cerrado Gold

Assuming the 90 days horizon Peloton Minerals is expected to generate 27.37 times less return on investment than Cerrado Gold. In addition to that, Peloton Minerals is 1.52 times more volatile than Cerrado Gold. It trades about 0.0 of its total potential returns per unit of risk. Cerrado Gold is currently generating about 0.15 per unit of volatility. If you would invest  15.00  in Cerrado Gold on September 12, 2024 and sell it today you would earn a total of  10.00  from holding Cerrado Gold or generate 66.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Peloton Minerals  vs.  Cerrado Gold

Peloton Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Cerrado Gold

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Peloton Minerals and Cerrado Gold

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

The idea behind Peloton Minerals and Cerrado Gold 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.