Correlation Between Spirit Telecom and Platinum Asia
Can any of the company-specific risk be diversified away by investing in both Spirit Telecom and Platinum Asia 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 Spirit Telecom and Platinum Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirit Telecom and Platinum Asia Investments, you can compare the effects of market volatilities on Spirit Telecom and Platinum Asia 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 Spirit Telecom with a short position of Platinum Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirit Telecom and Platinum Asia.
Diversification Opportunities for Spirit Telecom and Platinum Asia
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Spirit and Platinum is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Spirit Telecom and Platinum Asia Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Asia Investments and Spirit Telecom 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 Spirit Telecom are associated (or correlated) with Platinum Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Asia Investments has no effect on the direction of Spirit Telecom i.e., Spirit Telecom and Platinum Asia go up and down completely randomly.
Pair Corralation between Spirit Telecom and Platinum Asia
Assuming the 90 days trading horizon Spirit Telecom is expected to under-perform the Platinum Asia. In addition to that, Spirit Telecom is 5.31 times more volatile than Platinum Asia Investments. It trades about -0.13 of its total potential returns per unit of risk. Platinum Asia Investments is currently generating about -0.07 per unit of volatility. If you would invest 102.00 in Platinum Asia Investments on October 18, 2024 and sell it today you would lose (1.00) from holding Platinum Asia Investments or give up 0.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirit Telecom vs. Platinum Asia Investments
Performance |
| Timeline |
| Spirit Telecom |
| Platinum Asia Investments |
Spirit Telecom and Platinum Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirit Telecom and Platinum Asia
The main advantage of trading using opposite Spirit Telecom and Platinum Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirit Telecom position performs unexpectedly, Platinum Asia 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 Platinum Asia will offset losses from the drop in Platinum Asia's long position.| Spirit Telecom vs. Iron Road | Spirit Telecom vs. Ainsworth Game Technology | Spirit Telecom vs. Gold Road Resources | Spirit Telecom vs. Retail Food Group |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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