Correlation Between Eastern Platinum and Brimstone Investment
Can any of the company-specific risk be diversified away by investing in both Eastern Platinum and Brimstone Investment 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 Brimstone Investment 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 Brimstone Investment, you can compare the effects of market volatilities on Eastern Platinum and Brimstone Investment 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 Brimstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Platinum and Brimstone Investment.
Diversification Opportunities for Eastern Platinum and Brimstone Investment
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eastern and Brimstone is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Platinum Limited and Brimstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brimstone Investment 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 Brimstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brimstone Investment has no effect on the direction of Eastern Platinum i.e., Eastern Platinum and Brimstone Investment go up and down completely randomly.
Pair Corralation between Eastern Platinum and Brimstone Investment
Assuming the 90 days trading horizon Eastern Platinum Limited is expected to generate 1.43 times more return on investment than Brimstone Investment. However, Eastern Platinum is 1.43 times more volatile than Brimstone Investment. It trades about 0.06 of its potential returns per unit of risk. Brimstone Investment is currently generating about 0.04 per unit of risk. If you would invest 33,100 in Eastern Platinum Limited on August 27, 2024 and sell it today you would lose (12,000) from holding Eastern Platinum Limited or give up 36.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Eastern Platinum Limited vs. Brimstone Investment
Performance |
| Timeline |
| Eastern Platinum |
| Brimstone Investment |
Eastern Platinum and Brimstone Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Platinum and Brimstone Investment
The main advantage of trading using opposite Eastern Platinum and Brimstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Platinum position performs unexpectedly, Brimstone Investment 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 Brimstone Investment will offset losses from the drop in Brimstone Investment's long position.| Eastern Platinum vs. Brimstone Investment | Eastern Platinum vs. Hosken Consolidated Investments | Eastern Platinum vs. Life Healthcare | Eastern Platinum vs. Kumba Iron Ore |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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