Correlation Between SR Accord and Peninsula

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

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

Diversification Opportunities for SR Accord and Peninsula

0.94

Correlation Coefficient

SR Accord  Peninsula

Almost no diversification

The 3 months correlation between SRAC and Peninsula is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding SR Accord and Peninsula Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peninsula Group and SR Accord 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 SR Accord are associated (or correlated) with Peninsula. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peninsula Group has no effect on the direction of SR Accord i.e., SR Accord and Peninsula go up and down completely randomly.

Pair Corralation between SR Accord and Peninsula

Assuming the 90 days trading horizon SR Accord is expected to generate 1.72 times more return on investment than Peninsula. However, SR Accord is 1.72 times more volatile than Peninsula Group. It trades about 0.34 of its potential returns per unit of risk. Peninsula Group is currently generating about 0.44 per unit of risk. If you would invest  285,979  in SR Accord on September 12, 2024 and sell it today you would earn a total of  135,121  from holding SR Accord or generate 47.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	97.83%
Values	Daily Returns

SR Accord  vs.  Peninsula Group

SR Accord

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SR Accord are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SR Accord sustained solid returns over the last few months and may actually be approaching a breakup point.

Peninsula Group

Risk-Adjusted Performance

34 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Peninsula Group are ranked lower than 34 (%) 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.

Pair Trading with SR Accord and Peninsula

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

The idea behind SR Accord and Peninsula Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.