Correlation Between M3 Mining and Platinum Asia
Can any of the company-specific risk be diversified away by investing in both M3 Mining 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 M3 Mining and Platinum Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between M3 Mining and Platinum Asia Investments, you can compare the effects of market volatilities on M3 Mining 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 M3 Mining with a short position of Platinum Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of M3 Mining and Platinum Asia.
Diversification Opportunities for M3 Mining and Platinum Asia
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between M3M and Platinum is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding M3 Mining 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 M3 Mining 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 M3 Mining 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 M3 Mining i.e., M3 Mining and Platinum Asia go up and down completely randomly.
Pair Corralation between M3 Mining and Platinum Asia
Assuming the 90 days trading horizon M3 Mining is expected to under-perform the Platinum Asia. In addition to that, M3 Mining is 3.9 times more volatile than Platinum Asia Investments. It trades about -0.13 of its total potential returns per unit of risk. Platinum Asia Investments is currently generating about -0.31 per unit of volatility. If you would invest 106.00 in Platinum Asia Investments on August 29, 2024 and sell it today you would lose (9.00) from holding Platinum Asia Investments or give up 8.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
M3 Mining vs. Platinum Asia Investments
Performance |
| Timeline |
| M3 Mining |
| Platinum Asia Investments |
M3 Mining and Platinum Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M3 Mining and Platinum Asia
The main advantage of trading using opposite M3 Mining and Platinum Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M3 Mining 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.| M3 Mining vs. Platinum Asia Investments | M3 Mining vs. Autosports Group | M3 Mining vs. Skycity Entertainment Group | M3 Mining vs. Nine Entertainment Co |
| Platinum Asia vs. Champion Iron | Platinum Asia vs. Ridley | Platinum Asia vs. Peel Mining | Platinum Asia vs. Australian Dairy Farms |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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