Correlation Between Pinetree Capital and Mega Uranium

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

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

Diversification Opportunities for Pinetree Capital and Mega Uranium

0.69

Correlation Coefficient

Pinetree Capital  Mega Uranium

Poor diversification

The 3 months correlation between Pinetree and Mega is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Pinetree Capital and Mega Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mega Uranium and Pinetree Capital 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 Pinetree Capital are associated (or correlated) with Mega Uranium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mega Uranium has no effect on the direction of Pinetree Capital i.e., Pinetree Capital and Mega Uranium go up and down completely randomly.

Pair Corralation between Pinetree Capital and Mega Uranium

Assuming the 90 days trading horizon Pinetree Capital is expected to generate 1.11 times more return on investment than Mega Uranium. However, Pinetree Capital is 1.11 times more volatile than Mega Uranium. It trades about 0.23 of its potential returns per unit of risk. Mega Uranium is currently generating about 0.09 per unit of risk. If you would invest  700.00  in Pinetree Capital on September 12, 2024 and sell it today you would earn a total of  453.00  from holding Pinetree Capital or generate 64.71% return on investment over 90 days.

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

Pinetree Capital  vs.  Mega Uranium

Pinetree Capital

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pinetree Capital are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Pinetree Capital displayed solid returns over the last few months and may actually be approaching a breakup point.

Mega Uranium

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mega Uranium are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Mega Uranium displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pinetree Capital and Mega Uranium

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

The idea behind Pinetree Capital and Mega Uranium 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.