Correlation Between Eastern Platinum and Solitario Exploration
Can any of the company-specific risk be diversified away by investing in both Eastern Platinum and Solitario Exploration 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 Solitario Exploration 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 Solitario Exploration Royalty, you can compare the effects of market volatilities on Eastern Platinum and Solitario Exploration 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 Solitario Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Platinum and Solitario Exploration.
Diversification Opportunities for Eastern Platinum and Solitario Exploration
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eastern and Solitario is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Platinum Limited and Solitario Exploration Royalty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solitario Exploration 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 Solitario Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solitario Exploration has no effect on the direction of Eastern Platinum i.e., Eastern Platinum and Solitario Exploration go up and down completely randomly.
Pair Corralation between Eastern Platinum and Solitario Exploration
Assuming the 90 days trading horizon Eastern Platinum Limited is expected to generate 1.79 times more return on investment than Solitario Exploration. However, Eastern Platinum is 1.79 times more volatile than Solitario Exploration Royalty. It trades about -0.06 of its potential returns per unit of risk. Solitario Exploration Royalty is currently generating about -0.13 per unit of risk. If you would invest 20.00 in Eastern Platinum Limited on August 29, 2024 and sell it today you would lose (2.00) from holding Eastern Platinum Limited or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Platinum Limited vs. Solitario Exploration Royalty
Performance |
| Timeline |
| Eastern Platinum |
| Solitario Exploration |
Eastern Platinum and Solitario Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Platinum and Solitario Exploration
The main advantage of trading using opposite Eastern Platinum and Solitario Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Platinum position performs unexpectedly, Solitario Exploration 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 Solitario Exploration will offset losses from the drop in Solitario Exploration's long position.| Eastern Platinum vs. Platinum Group Metals | Eastern Platinum vs. Centamin PLC | Eastern Platinum vs. Entree Resources | Eastern Platinum vs. Aura Minerals |
| Solitario Exploration vs. Northcliff Resources | Solitario Exploration vs. Lupaka Gold Corp | Solitario Exploration vs. Thunderstruck Resources | Solitario Exploration vs. Asiabasemetals |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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