Correlation Between Global Health and Platinum Asia
Can any of the company-specific risk be diversified away by investing in both Global Health and Platinum Asia 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 Global Health and Platinum Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Health and Platinum Asia Investments, you can compare the effects of market volatilities on Global Health and Platinum Asia 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 Global Health with a short position of Platinum Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Health and Platinum Asia.
Diversification Opportunities for Global Health and Platinum Asia
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and Platinum is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Global Health and Platinum Asia Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Asia Investments and Global Health 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 Global Health are associated (or correlated) with Platinum Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Asia Investments has no effect on the direction of Global Health i.e., Global Health and Platinum Asia go up and down completely randomly.
Pair Corralation between Global Health and Platinum Asia
Assuming the 90 days trading horizon Global Health is expected to generate 4.22 times more return on investment than Platinum Asia. However, Global Health is 4.22 times more volatile than Platinum Asia Investments. It trades about 0.02 of its potential returns per unit of risk. Platinum Asia Investments is currently generating about 0.05 per unit of risk. If you would invest 14.00 in Global Health on November 7, 2024 and sell it today you would earn a total of 0.00 from holding Global Health or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Global Health vs. Platinum Asia Investments
Performance |
| Timeline |
| Global Health |
| Platinum Asia Investments |
Global Health and Platinum Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Health and Platinum Asia
The main advantage of trading using opposite Global Health and Platinum Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Health position performs unexpectedly, Platinum Asia 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 Platinum Asia will offset losses from the drop in Platinum Asia's long position.| Global Health vs. Perseus Mining | Global Health vs. DMC Mining | Global Health vs. COAST ENTERTAINMENT HOLDINGS | Global Health vs. Bailador Technology Invest |
| Platinum Asia vs. BlackWall Property Funds | Platinum Asia vs. Mach7 Technologies | Platinum Asia vs. Pure Foods Tasmania | Platinum Asia vs. Macquarie Technology Group |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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