Correlation Between Empress Royalty and Platinum Group

Can any of the company-specific risk be diversified away by investing in both Empress Royalty and Platinum Group 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 Empress Royalty and Platinum Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Empress Royalty Corp and Platinum Group Metals, you can compare the effects of market volatilities on Empress Royalty and Platinum Group 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 Empress Royalty with a short position of Platinum Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empress Royalty and Platinum Group.

Diversification Opportunities for Empress Royalty and Platinum Group

0.25

Correlation Coefficient

Empress Royalty  Platinum Group

Modest diversification

The 3 months correlation between Empress and Platinum is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Empress Royalty Corp and Platinum Group Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Group Metals and Empress Royalty 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 Empress Royalty Corp are associated (or correlated) with Platinum Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Group Metals has no effect on the direction of Empress Royalty i.e., Empress Royalty and Platinum Group go up and down completely randomly.

Pair Corralation between Empress Royalty and Platinum Group

Assuming the 90 days horizon Empress Royalty Corp is expected to under-perform the Platinum Group. But the otc stock apears to be less risky and, when comparing its historical volatility, Empress Royalty Corp is 1.25 times less risky than Platinum Group. The otc stock trades about -0.05 of its potential returns per unit of risk. The Platinum Group Metals is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  118.00  in Platinum Group Metals on September 2, 2024 and sell it today you would earn a total of  55.00  from holding Platinum Group Metals or generate 46.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Empress Royalty Corp  vs.  Platinum Group Metals

Empress Royalty Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Empress Royalty Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Platinum Group Metals

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Platinum Group Metals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating essential indicators, Platinum Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Empress Royalty and Platinum Group

The main advantage of trading using opposite Empress Royalty and Platinum Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empress Royalty position performs unexpectedly, Platinum Group 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 Group will offset losses from the drop in Platinum Group's long position.

The idea behind Empress Royalty Corp and Platinum Group Metals 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.

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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 Stocks Directory module to find actively traded stocks across global markets.