Correlation Between Platinum Asia and De Grey
Can any of the company-specific risk be diversified away by investing in both Platinum Asia and De Grey 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 De Grey 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 De Grey Mining, you can compare the effects of market volatilities on Platinum Asia and De Grey 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 De Grey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Platinum Asia and De Grey.
Diversification Opportunities for Platinum Asia and De Grey
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Platinum and DEG is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Asia Investments and De Grey Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Grey Mining 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 De Grey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Grey Mining has no effect on the direction of Platinum Asia i.e., Platinum Asia and De Grey go up and down completely randomly.
Pair Corralation between Platinum Asia and De Grey
Assuming the 90 days trading horizon Platinum Asia is expected to generate 1.42 times less return on investment than De Grey. But when comparing it to its historical volatility, Platinum Asia Investments is 2.07 times less risky than De Grey. It trades about 0.04 of its potential returns per unit of risk. De Grey Mining is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 125.00 in De Grey Mining on September 2, 2024 and sell it today you would earn a total of 27.00 from holding De Grey Mining or generate 21.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Platinum Asia Investments vs. De Grey Mining
Performance |
| Timeline |
| Platinum Asia Investments |
| De Grey Mining |
Platinum Asia and De Grey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Platinum Asia and De Grey
The main advantage of trading using opposite Platinum Asia and De Grey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Platinum Asia position performs unexpectedly, De Grey 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 De Grey will offset losses from the drop in De Grey's long position.| Platinum Asia vs. WA1 Resources | Platinum Asia vs. Predictive Discovery | Platinum Asia vs. Cooper Metals | Platinum Asia vs. OD6 Metals |
| De Grey vs. Microequities Asset Management | De Grey vs. Regal Funds Management | De Grey vs. Platinum Asia Investments | De Grey vs. REGAL ASIAN INVESTMENTS |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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