Correlation Between Steamships Trading and Peel Mining

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

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

Diversification Opportunities for Steamships Trading and Peel Mining

0.28

Correlation Coefficient

Steamships Trading  Peel Mining

Modest diversification

The 3 months correlation between Steamships and Peel is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Steamships Trading and Peel Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peel Mining and Steamships Trading 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 Steamships Trading are associated (or correlated) with Peel Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peel Mining has no effect on the direction of Steamships Trading i.e., Steamships Trading and Peel Mining go up and down completely randomly.

Pair Corralation between Steamships Trading and Peel Mining

Assuming the 90 days trading horizon Steamships Trading is expected to under-perform the Peel Mining. But the stock apears to be less risky and, when comparing its historical volatility, Steamships Trading is 17.44 times less risky than Peel Mining. The stock trades about -0.02 of its potential returns per unit of risk. The Peel Mining is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Peel Mining on September 29, 2024 and sell it today you would earn a total of  1.00  from holding Peel Mining or generate 9.09% return on investment over 90 days.

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

Steamships Trading  vs.  Peel Mining

Steamships Trading

Risk-Adjusted Performance

0 of 100

Very Weak

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

Peel Mining

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Peel Mining are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Peel Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Steamships Trading and Peel Mining

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

The idea behind Steamships Trading and Peel Mining 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.