Correlation Between Wam Leaders and Platinum Asia
Can any of the company-specific risk be diversified away by investing in both Wam Leaders 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 Wam Leaders and Platinum Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wam Leaders and Platinum Asia Investments, you can compare the effects of market volatilities on Wam Leaders 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 Wam Leaders with a short position of Platinum Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wam Leaders and Platinum Asia.
Diversification Opportunities for Wam Leaders and Platinum Asia
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wam and Platinum is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Wam Leaders 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 Wam Leaders 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 Wam Leaders 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 Wam Leaders i.e., Wam Leaders and Platinum Asia go up and down completely randomly.
Pair Corralation between Wam Leaders and Platinum Asia
Assuming the 90 days trading horizon Wam Leaders is expected to generate 0.7 times more return on investment than Platinum Asia. However, Wam Leaders is 1.43 times less risky than Platinum Asia. It trades about -0.24 of its potential returns per unit of risk. Platinum Asia Investments is currently generating about -0.22 per unit of risk. If you would invest 132.00 in Wam Leaders on September 1, 2024 and sell it today you would lose (7.00) from holding Wam Leaders or give up 5.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Wam Leaders vs. Platinum Asia Investments
Performance |
| Timeline |
| Wam Leaders |
| Platinum Asia Investments |
Wam Leaders and Platinum Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wam Leaders and Platinum Asia
The main advantage of trading using opposite Wam Leaders and Platinum Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wam Leaders 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.| Wam Leaders vs. ABACUS STORAGE KING | Wam Leaders vs. Navigator Global Investments | Wam Leaders vs. Legacy Iron Ore | Wam Leaders vs. Tombador Iron |
| Platinum Asia vs. Navigator Global Investments | Platinum Asia vs. Diversified United Investment | Platinum Asia vs. Garda Diversified Ppty | Platinum Asia vs. Argo Investments |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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