Correlation Between Impala Platinum and American Sierra
Can any of the company-specific risk be diversified away by investing in both Impala Platinum and American Sierra 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 Impala Platinum and American Sierra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Impala Platinum Holdings and American Sierra Gold, you can compare the effects of market volatilities on Impala Platinum and American Sierra 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 Impala Platinum with a short position of American Sierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impala Platinum and American Sierra.
Diversification Opportunities for Impala Platinum and American Sierra
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Impala and American is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Impala Platinum Holdings and American Sierra Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Sierra Gold and Impala 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 Impala Platinum Holdings are associated (or correlated) with American Sierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Sierra Gold has no effect on the direction of Impala Platinum i.e., Impala Platinum and American Sierra go up and down completely randomly.
Pair Corralation between Impala Platinum and American Sierra
Assuming the 90 days horizon Impala Platinum Holdings is expected to under-perform the American Sierra. But the otc stock apears to be less risky and, when comparing its historical volatility, Impala Platinum Holdings is 4.74 times less risky than American Sierra. The otc stock trades about -0.22 of its potential returns per unit of risk. The American Sierra Gold is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 0.50 in American Sierra Gold on August 30, 2024 and sell it today you would lose (0.15) from holding American Sierra Gold or give up 30.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Impala Platinum Holdings vs. American Sierra Gold
Performance |
| Timeline |
| Impala Platinum Holdings |
| American Sierra Gold |
Impala Platinum and American Sierra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Impala Platinum and American Sierra
The main advantage of trading using opposite Impala Platinum and American Sierra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Impala Platinum position performs unexpectedly, American Sierra 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 American Sierra will offset losses from the drop in American Sierra's long position.| Impala Platinum vs. Anglo American Platinum | Impala Platinum vs. Sibanye Gold Ltd | Impala Platinum vs. Anglo American PLC | Impala Platinum vs. Fortescue Metals Group |
| American Sierra vs. Arctic Star Exploration | American Sierra vs. American Clean Resources | American Sierra vs. American Creek Resources | American Sierra vs. Arras Minerals Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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