Correlation Between Platinum Asset and MotorCycle Holdings
Can any of the company-specific risk be diversified away by investing in both Platinum Asset and MotorCycle Holdings 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 Asset and MotorCycle Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Platinum Asset Management and MotorCycle Holdings, you can compare the effects of market volatilities on Platinum Asset and MotorCycle Holdings 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 Asset with a short position of MotorCycle Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Platinum Asset and MotorCycle Holdings.
Diversification Opportunities for Platinum Asset and MotorCycle Holdings
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Platinum and MotorCycle is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Asset Management and MotorCycle Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MotorCycle Holdings and Platinum Asset 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 Asset Management are associated (or correlated) with MotorCycle Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MotorCycle Holdings has no effect on the direction of Platinum Asset i.e., Platinum Asset and MotorCycle Holdings go up and down completely randomly.
Pair Corralation between Platinum Asset and MotorCycle Holdings
Assuming the 90 days trading horizon Platinum Asset Management is expected to under-perform the MotorCycle Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Platinum Asset Management is 2.02 times less risky than MotorCycle Holdings. The stock trades about -0.36 of its potential returns per unit of risk. The MotorCycle Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 161.00 in MotorCycle Holdings on August 30, 2024 and sell it today you would earn a total of 21.00 from holding MotorCycle Holdings or generate 13.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Platinum Asset Management vs. MotorCycle Holdings
Performance |
| Timeline |
| Platinum Asset Management |
| MotorCycle Holdings |
Platinum Asset and MotorCycle Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Platinum Asset and MotorCycle Holdings
The main advantage of trading using opposite Platinum Asset and MotorCycle Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Platinum Asset position performs unexpectedly, MotorCycle Holdings 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 MotorCycle Holdings will offset losses from the drop in MotorCycle Holdings' long position.| Platinum Asset vs. Retail Food Group | Platinum Asset vs. Duxton Broadacre Farms | Platinum Asset vs. Gold Road Resources |
| MotorCycle Holdings vs. Jupiter Energy | MotorCycle Holdings vs. WA1 Resources | MotorCycle Holdings vs. Predictive Discovery | MotorCycle Holdings vs. Cooper Metals |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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