Correlation Between Glencore PLC and Eastern Platinum
Can any of the company-specific risk be diversified away by investing in both Glencore PLC 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 Glencore PLC and Eastern Platinum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Glencore PLC and Eastern Platinum Limited, you can compare the effects of market volatilities on Glencore PLC 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 Glencore PLC with a short position of Eastern Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glencore PLC and Eastern Platinum.
Diversification Opportunities for Glencore PLC and Eastern Platinum
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Glencore and Eastern is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC and Eastern Platinum Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Platinum and Glencore PLC 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 Glencore PLC 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 Glencore PLC i.e., Glencore PLC and Eastern Platinum go up and down completely randomly.
Pair Corralation between Glencore PLC and Eastern Platinum
Assuming the 90 days trading horizon Glencore PLC is expected to under-perform the Eastern Platinum. But the stock apears to be less risky and, when comparing its historical volatility, Glencore PLC is 35.22 times less risky than Eastern Platinum. The stock trades about -0.01 of its potential returns per unit of risk. The Eastern Platinum Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 33,100 in Eastern Platinum Limited on September 2, 2024 and sell it today you would lose (17,100) from holding Eastern Platinum Limited or give up 51.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Glencore PLC vs. Eastern Platinum Limited
Performance |
| Timeline |
| Glencore PLC |
| Eastern Platinum |
Glencore PLC and Eastern Platinum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glencore PLC and Eastern Platinum
The main advantage of trading using opposite Glencore PLC and Eastern Platinum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glencore PLC 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.The idea behind Glencore PLC and Eastern Platinum Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Eastern Platinum vs. Prosus NV | Eastern Platinum vs. British American Tobacco | Eastern Platinum vs. Glencore PLC | Eastern Platinum vs. Anglo American PLC |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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