Correlation Between Platinum Investment and Nine Dragons

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Can any of the company-specific risk be diversified away by investing in both Platinum Investment and Nine Dragons 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 Investment and Nine Dragons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Platinum Investment Management and Nine Dragons Paper, you can compare the effects of market volatilities on Platinum Investment and Nine Dragons 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 Investment with a short position of Nine Dragons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Platinum Investment and Nine Dragons.

Diversification Opportunities for Platinum Investment and Nine Dragons

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Platinum and Nine is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Investment Management and Nine Dragons Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Dragons Paper and Platinum Investment 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 Investment Management are associated (or correlated) with Nine Dragons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Dragons Paper has no effect on the direction of Platinum Investment i.e., Platinum Investment and Nine Dragons go up and down completely randomly.

Pair Corralation between Platinum Investment and Nine Dragons

Assuming the 90 days horizon Platinum Investment Management is expected to under-perform the Nine Dragons. But the stock apears to be less risky and, when comparing its historical volatility, Platinum Investment Management is 1.78 times less risky than Nine Dragons. The stock trades about 0.0 of its potential returns per unit of risk. The Nine Dragons Paper is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  71.00  in Nine Dragons Paper on August 26, 2024 and sell it today you would lose (33.00) from holding Nine Dragons Paper or give up 46.48% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Platinum Investment Management  vs.  Nine Dragons Paper

 Performance 
       Timeline  
Platinum Investment 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Platinum Investment Management are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Platinum Investment reported solid returns over the last few months and may actually be approaching a breakup point.
Nine Dragons Paper 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Nine Dragons Paper are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nine Dragons reported solid returns over the last few months and may actually be approaching a breakup point.

Platinum Investment and Nine Dragons Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Platinum Investment and Nine Dragons

The main advantage of trading using opposite Platinum Investment and Nine Dragons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Platinum Investment position performs unexpectedly, Nine Dragons 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 Nine Dragons will offset losses from the drop in Nine Dragons' long position.
The idea behind Platinum Investment Management and Nine Dragons Paper 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.
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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