Correlation Between Eastern Platinum and Platinum Group
Can any of the company-specific risk be diversified away by investing in both Eastern Platinum and Platinum Group 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 Platinum Group 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 Platinum Group Metals, you can compare the effects of market volatilities on Eastern Platinum and Platinum Group 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 Platinum Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Platinum and Platinum Group.
Diversification Opportunities for Eastern Platinum and Platinum Group
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eastern and Platinum is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Platinum Limited and Platinum Group Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Group Metals 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 Platinum Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Group Metals has no effect on the direction of Eastern Platinum i.e., Eastern Platinum and Platinum Group go up and down completely randomly.
Pair Corralation between Eastern Platinum and Platinum Group
Assuming the 90 days trading horizon Eastern Platinum Limited is expected to generate 1.58 times more return on investment than Platinum Group. However, Eastern Platinum is 1.58 times more volatile than Platinum Group Metals. It trades about 0.14 of its potential returns per unit of risk. Platinum Group Metals is currently generating about -0.03 per unit of risk. If you would invest 17.00 in Eastern Platinum Limited on December 8, 2024 and sell it today you would earn a total of 3.00 from holding Eastern Platinum Limited or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Platinum Limited vs. Platinum Group Metals
Performance |
| Timeline |
| Eastern Platinum |
| Platinum Group Metals |
Eastern Platinum and Platinum Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Platinum and Platinum Group
The main advantage of trading using opposite Eastern Platinum and Platinum Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Platinum position performs unexpectedly, Platinum Group 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 Platinum Group will offset losses from the drop in Platinum Group's long position.| Eastern Platinum vs. Platinum Group Metals | ||
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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