Correlation Between Platinum Group and Eastern Platinum
Can any of the company-specific risk be diversified away by investing in both Platinum Group and Eastern Platinum 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 Group and Eastern Platinum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Platinum Group Metals and Eastern Platinum Limited, you can compare the effects of market volatilities on Platinum Group and Eastern Platinum 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 Group with a short position of Eastern Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Platinum Group and Eastern Platinum.
Diversification Opportunities for Platinum Group and Eastern Platinum
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Platinum and Eastern is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Group Metals and Eastern Platinum Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Platinum and Platinum Group 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 Group Metals are associated (or correlated) with Eastern Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Platinum has no effect on the direction of Platinum Group i.e., Platinum Group and Eastern Platinum go up and down completely randomly.
Pair Corralation between Platinum Group and Eastern Platinum
Assuming the 90 days trading horizon Platinum Group Metals is expected to under-perform the Eastern Platinum. But the stock apears to be less risky and, when comparing its historical volatility, Platinum Group Metals is 1.15 times less risky than Eastern Platinum. The stock trades about -0.08 of its potential returns per unit of risk. The Eastern Platinum Limited is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Eastern Platinum Limited on August 25, 2024 and sell it today you would lose (2.00) from holding Eastern Platinum Limited or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Platinum Group Metals vs. Eastern Platinum Limited
Performance |
| Timeline |
| Platinum Group Metals |
| Eastern Platinum |
Platinum Group and Eastern Platinum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Platinum Group and Eastern Platinum
The main advantage of trading using opposite Platinum Group and Eastern Platinum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Platinum Group position performs unexpectedly, Eastern Platinum 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 Eastern Platinum will offset losses from the drop in Eastern Platinum's long position.| Platinum Group vs. Eastern Platinum Limited | Platinum Group vs. Entree Resources | Platinum Group vs. Solitario Exploration Royalty | Platinum Group vs. Minco Silver |
| Eastern Platinum vs. Platinum Group Metals | Eastern Platinum vs. Centamin PLC | Eastern Platinum vs. Entree Resources | Eastern Platinum vs. Aura Minerals |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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