Correlation Between Firstrand and Eastern Platinum
Can any of the company-specific risk be diversified away by investing in both Firstrand and Eastern Platinum 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 Firstrand and Eastern Platinum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Firstrand and Eastern Platinum Limited, you can compare the effects of market volatilities on Firstrand and Eastern Platinum 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 Firstrand with a short position of Eastern Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firstrand and Eastern Platinum.
Diversification Opportunities for Firstrand and Eastern Platinum
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Firstrand and Eastern is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Firstrand and Eastern Platinum Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Platinum and Firstrand 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 Firstrand are associated (or correlated) with Eastern Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Platinum has no effect on the direction of Firstrand i.e., Firstrand and Eastern Platinum go up and down completely randomly.
Pair Corralation between Firstrand and Eastern Platinum
Assuming the 90 days trading horizon Firstrand is expected to under-perform the Eastern Platinum. But the stock apears to be less risky and, when comparing its historical volatility, Firstrand is 9.8 times less risky than Eastern Platinum. The stock trades about -0.17 of its potential returns per unit of risk. The Eastern Platinum Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 15,100 in Eastern Platinum Limited on November 28, 2024 and sell it today you would earn a total of 900.00 from holding Eastern Platinum Limited or generate 5.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Firstrand vs. Eastern Platinum Limited
Performance |
| Timeline |
| Firstrand |
| Eastern Platinum |
Firstrand and Eastern Platinum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Firstrand and Eastern Platinum
The main advantage of trading using opposite Firstrand and Eastern Platinum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firstrand position performs unexpectedly, Eastern Platinum 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 Eastern Platinum will offset losses from the drop in Eastern Platinum's long position.| Firstrand vs. Kumba Iron Ore | Firstrand vs. Harmony Gold Mining | Firstrand vs. Allied Electronics | Firstrand vs. Boxer Retail |
| Eastern Platinum vs. eMedia Holdings Limited | Eastern Platinum vs. Master Drilling Group | Eastern Platinum vs. Bytes Technology | Eastern Platinum vs. Safari Investments RSA |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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