Correlation Between Eastern Platinum and New Pacific
Can any of the company-specific risk be diversified away by investing in both Eastern Platinum and New Pacific 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 New Pacific 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 New Pacific Metals, you can compare the effects of market volatilities on Eastern Platinum and New Pacific 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 New Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Platinum and New Pacific.
Diversification Opportunities for Eastern Platinum and New Pacific
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eastern and New is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Platinum Limited and New Pacific Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Pacific 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 New Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Pacific Metals has no effect on the direction of Eastern Platinum i.e., Eastern Platinum and New Pacific go up and down completely randomly.
Pair Corralation between Eastern Platinum and New Pacific
Assuming the 90 days horizon Eastern Platinum Limited is expected to under-perform the New Pacific. In addition to that, Eastern Platinum is 1.73 times more volatile than New Pacific Metals. It trades about -0.05 of its total potential returns per unit of risk. New Pacific Metals is currently generating about 0.06 per unit of volatility. If you would invest 147.00 in New Pacific Metals on September 14, 2024 and sell it today you would earn a total of 5.00 from holding New Pacific Metals or generate 3.4% 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. New Pacific Metals
Performance |
| Timeline |
| Eastern Platinum |
| New Pacific Metals |
Eastern Platinum and New Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Platinum and New Pacific
The main advantage of trading using opposite Eastern Platinum and New Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Platinum position performs unexpectedly, New Pacific 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 New Pacific will offset losses from the drop in New Pacific'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 |
| New Pacific vs. Endeavour Silver Corp | New Pacific vs. Metalla Royalty Streaming | New Pacific vs. Hecla Mining | New Pacific vs. Gatos Silver |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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