Correlation Between Platinum Asia and Xero
Can any of the company-specific risk be diversified away by investing in both Platinum Asia and Xero 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 Xero 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 Xero, you can compare the effects of market volatilities on Platinum Asia and Xero 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 Xero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Platinum Asia and Xero.
Diversification Opportunities for Platinum Asia and Xero
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Platinum and Xero is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Asia Investments and Xero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xero 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 Xero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xero has no effect on the direction of Platinum Asia i.e., Platinum Asia and Xero go up and down completely randomly.
Pair Corralation between Platinum Asia and Xero
Assuming the 90 days trading horizon Platinum Asia is expected to generate 2.19 times less return on investment than Xero. But when comparing it to its historical volatility, Platinum Asia Investments is 1.55 times less risky than Xero. It trades about 0.07 of its potential returns per unit of risk. Xero is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 11,182 in Xero on September 1, 2024 and sell it today you would earn a total of 6,203 from holding Xero or generate 55.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Platinum Asia Investments vs. Xero
Performance |
| Timeline |
| Platinum Asia Investments |
| Xero |
Platinum Asia and Xero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Platinum Asia and Xero
The main advantage of trading using opposite Platinum Asia and Xero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Platinum Asia position performs unexpectedly, Xero 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 Xero will offset losses from the drop in Xero's long position.| Platinum Asia vs. Navigator Global Investments | Platinum Asia vs. Diversified United Investment | Platinum Asia vs. Garda Diversified Ppty | Platinum Asia vs. Argo Investments |
| Xero vs. Toys R Us | Xero vs. Embark Education Group | Xero vs. G8 Education | Xero vs. Bailador Technology Invest |
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.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |