Correlation Between Nsx and Platinum Asset
Can any of the company-specific risk be diversified away by investing in both Nsx and Platinum Asset 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 Nsx and Platinum Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nsx and Platinum Asset Management, you can compare the effects of market volatilities on Nsx and Platinum Asset 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 Nsx with a short position of Platinum Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nsx and Platinum Asset.
Diversification Opportunities for Nsx and Platinum Asset
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nsx and Platinum is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Nsx and Platinum Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Asset Management and Nsx 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 Nsx are associated (or correlated) with Platinum Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Asset Management has no effect on the direction of Nsx i.e., Nsx and Platinum Asset go up and down completely randomly.
Pair Corralation between Nsx and Platinum Asset
Assuming the 90 days trading horizon Nsx is expected to generate 5.4 times more return on investment than Platinum Asset. However, Nsx is 5.4 times more volatile than Platinum Asset Management. It trades about 0.02 of its potential returns per unit of risk. Platinum Asset Management is currently generating about -0.48 per unit of risk. If you would invest 3.00 in Nsx on September 4, 2024 and sell it today you would lose (0.10) from holding Nsx or give up 3.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nsx vs. Platinum Asset Management
Performance |
| Timeline |
| Nsx |
| Platinum Asset Management |
Nsx and Platinum Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nsx and Platinum Asset
The main advantage of trading using opposite Nsx and Platinum Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nsx position performs unexpectedly, Platinum Asset 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 Asset will offset losses from the drop in Platinum Asset's long position.The idea behind Nsx and Platinum Asset Management 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.| Platinum Asset vs. Westpac Banking | Platinum Asset vs. Ecofibre | Platinum Asset vs. Adriatic Metals Plc | Platinum Asset 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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