Correlation Between Commercial Vehicle and Platinum Investment

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

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

Diversification Opportunities for Commercial Vehicle and Platinum Investment

-0.21

Correlation Coefficient

Commercial Vehicle  Platinum Investment

Very good diversification

The 3 months correlation between Commercial and Platinum is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle Group and Platinum Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Investment and Commercial Vehicle 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 Commercial Vehicle Group are associated (or correlated) with Platinum Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Investment has no effect on the direction of Commercial Vehicle i.e., Commercial Vehicle and Platinum Investment go up and down completely randomly.

Pair Corralation between Commercial Vehicle and Platinum Investment

Assuming the 90 days trading horizon Commercial Vehicle Group is expected to under-perform the Platinum Investment. In addition to that, Commercial Vehicle is 1.25 times more volatile than Platinum Investment Management. It trades about -0.15 of its total potential returns per unit of risk. Platinum Investment Management is currently generating about 0.1 per unit of volatility. If you would invest  55.00  in Platinum Investment Management on September 3, 2024 and sell it today you would earn a total of  9.00  from holding Platinum Investment Management or generate 16.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Commercial Vehicle Group  vs.  Platinum Investment Management

Commercial Vehicle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Commercial Vehicle Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Platinum Investment

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Platinum Investment Management are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Platinum Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Commercial Vehicle and Platinum Investment

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

The idea behind Commercial Vehicle Group and Platinum Investment Management 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.