Correlation Between MINCO SILVER and Peabody Energy

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

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

Diversification Opportunities for MINCO SILVER and Peabody Energy

0.16

Correlation Coefficient

MINCO SILVER  Peabody Energy

Average diversification

The 3 months correlation between MINCO and Peabody is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding MINCO SILVER and Peabody Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peabody Energy and MINCO SILVER 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 MINCO SILVER are associated (or correlated) with Peabody Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peabody Energy has no effect on the direction of MINCO SILVER i.e., MINCO SILVER and Peabody Energy go up and down completely randomly.

Pair Corralation between MINCO SILVER and Peabody Energy

Assuming the 90 days trading horizon MINCO SILVER is expected to generate 1.84 times more return on investment than Peabody Energy. However, MINCO SILVER is 1.84 times more volatile than Peabody Energy. It trades about 0.05 of its potential returns per unit of risk. Peabody Energy is currently generating about -0.05 per unit of risk. If you would invest  11.00  in MINCO SILVER on September 25, 2024 and sell it today you would earn a total of  1.00  from holding MINCO SILVER or generate 9.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

MINCO SILVER  vs.  Peabody Energy

MINCO SILVER

Risk-Adjusted Performance

4 of 100

Insignificant

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

Peabody Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Peabody Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with MINCO SILVER and Peabody Energy

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

The idea behind MINCO SILVER and Peabody Energy 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.