Correlation Between Impala Platinum and Petra Diamonds
Can any of the company-specific risk be diversified away by investing in both Impala Platinum and Petra Diamonds 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 Petra Diamonds 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 Petra Diamonds Limited, you can compare the effects of market volatilities on Impala Platinum and Petra Diamonds 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 Petra Diamonds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impala Platinum and Petra Diamonds.
Diversification Opportunities for Impala Platinum and Petra Diamonds
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Impala and Petra is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Impala Platinum Holdings and Petra Diamonds Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petra Diamonds 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 Petra Diamonds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petra Diamonds has no effect on the direction of Impala Platinum i.e., Impala Platinum and Petra Diamonds go up and down completely randomly.
Pair Corralation between Impala Platinum and Petra Diamonds
Assuming the 90 days horizon Impala Platinum Holdings is expected to generate 1.06 times more return on investment than Petra Diamonds. However, Impala Platinum is 1.06 times more volatile than Petra Diamonds Limited. It trades about -0.02 of its potential returns per unit of risk. Petra Diamonds Limited is currently generating about -0.05 per unit of risk. If you would invest 1,164 in Impala Platinum Holdings on September 2, 2024 and sell it today you would lose (577.00) from holding Impala Platinum Holdings or give up 49.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Impala Platinum Holdings vs. Petra Diamonds Limited
Performance |
| Timeline |
| Impala Platinum Holdings |
| Petra Diamonds |
Impala Platinum and Petra Diamonds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Impala Platinum and Petra Diamonds
The main advantage of trading using opposite Impala Platinum and Petra Diamonds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Impala Platinum position performs unexpectedly, Petra Diamonds 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 Petra Diamonds will offset losses from the drop in Petra Diamonds' 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 |
| Petra Diamonds vs. Northam Platinum Holdings | Petra Diamonds vs. Clifton Mining Co | Petra Diamonds vs. Cartier Iron Corp | Petra Diamonds vs. Alien Metals |
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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