Correlation Between Platinum Asia and MFF Capital
Can any of the company-specific risk be diversified away by investing in both Platinum Asia and MFF Capital 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 MFF Capital 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 MFF Capital Investments, you can compare the effects of market volatilities on Platinum Asia and MFF Capital 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 MFF Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Platinum Asia and MFF Capital.
Diversification Opportunities for Platinum Asia and MFF Capital
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Platinum and MFF is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Asia Investments and MFF Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFF Capital Investments 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 MFF Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFF Capital Investments has no effect on the direction of Platinum Asia i.e., Platinum Asia and MFF Capital go up and down completely randomly.
Pair Corralation between Platinum Asia and MFF Capital
Assuming the 90 days trading horizon Platinum Asia Investments is expected to under-perform the MFF Capital. In addition to that, Platinum Asia is 1.21 times more volatile than MFF Capital Investments. It trades about -0.31 of its total potential returns per unit of risk. MFF Capital Investments is currently generating about 0.34 per unit of volatility. If you would invest 392.00 in MFF Capital Investments on August 28, 2024 and sell it today you would earn a total of 32.00 from holding MFF Capital Investments or generate 8.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Platinum Asia Investments vs. MFF Capital Investments
Performance |
| Timeline |
| Platinum Asia Investments |
| MFF Capital Investments |
Platinum Asia and MFF Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Platinum Asia and MFF Capital
The main advantage of trading using opposite Platinum Asia and MFF Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Platinum Asia position performs unexpectedly, MFF Capital 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 MFF Capital will offset losses from the drop in MFF Capital's long position.| Platinum Asia vs. Stelar Metals | Platinum Asia vs. Centaurus Metals | Platinum Asia vs. Perseus Mining | Platinum Asia vs. Regal Funds Management |
| MFF Capital vs. Australian Foundation Investment | MFF Capital vs. GQG Partners DRC | MFF Capital vs. Metrics Master Income | MFF Capital vs. L1 Long Short |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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