Correlation Between Eastern Platinum and Compania
Can any of the company-specific risk be diversified away by investing in both Eastern Platinum and Compania 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 Compania 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 Compania de Minas, you can compare the effects of market volatilities on Eastern Platinum and Compania 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 Compania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Platinum and Compania.
Diversification Opportunities for Eastern Platinum and Compania
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Eastern and Compania is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Platinum Limited and Compania de Minas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania de Minas 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 Compania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania de Minas has no effect on the direction of Eastern Platinum i.e., Eastern Platinum and Compania go up and down completely randomly.
Pair Corralation between Eastern Platinum and Compania
Assuming the 90 days horizon Eastern Platinum Limited is expected to generate 3.36 times more return on investment than Compania. However, Eastern Platinum is 3.36 times more volatile than Compania de Minas. It trades about 0.03 of its potential returns per unit of risk. Compania de Minas is currently generating about 0.0 per unit of risk. If you would invest 12.00 in Eastern Platinum Limited on September 14, 2024 and sell it today you would lose (2.00) from holding Eastern Platinum Limited or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Eastern Platinum Limited vs. Compania de Minas
Performance |
| Timeline |
| Eastern Platinum |
| Compania de Minas |
Eastern Platinum and Compania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Platinum and Compania
The main advantage of trading using opposite Eastern Platinum and Compania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Platinum position performs unexpectedly, Compania 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 Compania will offset losses from the drop in Compania's long position.| Eastern Platinum vs. Thunder Mountain Gold | Eastern Platinum vs. Chesapeake Gold Corp | Eastern Platinum vs. AbraSilver Resource Corp | Eastern Platinum vs. GoGold Resources |
| Compania vs. Gold Royalty Corp | Compania vs. SilverCrest Metals | Compania vs. McEwen Mining | Compania vs. Hecla Mining |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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