Correlation Between Platinum Asia and Challenger
Can any of the company-specific risk be diversified away by investing in both Platinum Asia and Challenger 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 Platinum Asia and Challenger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Platinum Asia Investments and Challenger, you can compare the effects of market volatilities on Platinum Asia and Challenger 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 Platinum Asia with a short position of Challenger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Platinum Asia and Challenger.
Diversification Opportunities for Platinum Asia and Challenger
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Platinum and Challenger is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Asia Investments and Challenger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Challenger and Platinum Asia 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 Platinum Asia Investments are associated (or correlated) with Challenger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Challenger has no effect on the direction of Platinum Asia i.e., Platinum Asia and Challenger go up and down completely randomly.
Pair Corralation between Platinum Asia and Challenger
Assuming the 90 days trading horizon Platinum Asia Investments is expected to generate 1.01 times more return on investment than Challenger. However, Platinum Asia is 1.01 times more volatile than Challenger. It trades about -0.06 of its potential returns per unit of risk. Challenger is currently generating about -0.14 per unit of risk. If you would invest 103.00 in Platinum Asia Investments on September 12, 2024 and sell it today you would lose (2.00) from holding Platinum Asia Investments or give up 1.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Platinum Asia Investments vs. Challenger
Performance |
| Timeline |
| Platinum Asia Investments |
| Challenger |
Platinum Asia and Challenger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Platinum Asia and Challenger
The main advantage of trading using opposite Platinum Asia and Challenger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Platinum Asia position performs unexpectedly, Challenger 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 Challenger will offset losses from the drop in Challenger's long position.| Platinum Asia vs. Aneka Tambang Tbk | Platinum Asia vs. Commonwealth Bank | Platinum Asia vs. BHP Group Limited | Platinum Asia vs. Rio Tinto |
| Challenger vs. Neurotech International | Challenger vs. Austco Healthcare | Challenger vs. Zoom2u Technologies | Challenger vs. Toys R Us |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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