Correlation Between Alphabet and Platinum Group

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

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

Diversification Opportunities for Alphabet and Platinum Group

0.64

Correlation Coefficient

Alphabet  Platinum Group

Poor diversification

The 3 months correlation between Alphabet and Platinum is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C 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 Alphabet 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 Alphabet Inc Class C 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 Alphabet i.e., Alphabet and Platinum Group go up and down completely randomly.

Pair Corralation between Alphabet and Platinum Group

Given the investment horizon of 90 days Alphabet is expected to generate 7.43 times less return on investment than Platinum Group. But when comparing it to its historical volatility, Alphabet Inc Class C is 3.27 times less risky than Platinum Group. It trades about 0.04 of its potential returns per unit of risk. Platinum Group Metals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  128.00  in Platinum Group Metals on August 30, 2024 and sell it today you would earn a total of  34.00  from holding Platinum Group Metals or generate 26.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Alphabet Inc Class C  vs.  Platinum Group Metals

Alphabet Class C

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Alphabet is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Platinum Group Metals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Platinum Group Metals are ranked lower than 7 (%) 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 Alphabet and Platinum Group

The main advantage of trading using opposite Alphabet and Platinum Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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 Alphabet Inc Class C 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.