Correlation Between Eastern Platinum and OceanaGold
Can any of the company-specific risk be diversified away by investing in both Eastern Platinum and OceanaGold 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 Eastern Platinum and OceanaGold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Platinum Limited and OceanaGold, you can compare the effects of market volatilities on Eastern Platinum and OceanaGold 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 Eastern Platinum with a short position of OceanaGold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Platinum and OceanaGold.
Diversification Opportunities for Eastern Platinum and OceanaGold
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eastern and OceanaGold is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Platinum Limited and OceanaGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OceanaGold and Eastern Platinum 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 Eastern Platinum Limited are associated (or correlated) with OceanaGold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OceanaGold has no effect on the direction of Eastern Platinum i.e., Eastern Platinum and OceanaGold go up and down completely randomly.
Pair Corralation between Eastern Platinum and OceanaGold
Assuming the 90 days trading horizon Eastern Platinum Limited is expected to under-perform the OceanaGold. In addition to that, Eastern Platinum is 1.89 times more volatile than OceanaGold. It trades about -0.06 of its total potential returns per unit of risk. OceanaGold is currently generating about 0.18 per unit of volatility. If you would invest 391.00 in OceanaGold on August 28, 2024 and sell it today you would earn a total of 43.00 from holding OceanaGold or generate 11.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Platinum Limited vs. OceanaGold
Performance |
| Timeline |
| Eastern Platinum |
| OceanaGold |
Eastern Platinum and OceanaGold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Platinum and OceanaGold
The main advantage of trading using opposite Eastern Platinum and OceanaGold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Platinum position performs unexpectedly, OceanaGold 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 OceanaGold will offset losses from the drop in OceanaGold's long position.| Eastern Platinum vs. Platinum Group Metals | Eastern Platinum vs. Centamin PLC | Eastern Platinum vs. Entree Resources | Eastern Platinum vs. Aura Minerals |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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