Correlation Between Impala Platinum and Renergen

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

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

Diversification Opportunities for Impala Platinum and Renergen

-0.6

Correlation Coefficient

Impala Platinum  Renergen

Excellent diversification

The 3 months correlation between Impala and Renergen is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Impala Platinum Holdings and Renergen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renergen and Impala Platinum 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 Impala Platinum Holdings are associated (or correlated) with Renergen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renergen has no effect on the direction of Impala Platinum i.e., Impala Platinum and Renergen go up and down completely randomly.

Pair Corralation between Impala Platinum and Renergen

Assuming the 90 days trading horizon Impala Platinum Holdings is expected to generate 1.48 times more return on investment than Renergen. However, Impala Platinum is 1.48 times more volatile than Renergen. It trades about 0.13 of its potential returns per unit of risk. Renergen is currently generating about -0.2 per unit of risk. If you would invest  780,200  in Impala Platinum Holdings on September 3, 2024 and sell it today you would earn a total of  239,700  from holding Impala Platinum Holdings or generate 30.72% return on investment over 90 days.

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

Impala Platinum Holdings  vs.  Renergen

Impala Platinum Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Impala Platinum Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Impala Platinum exhibited solid returns over the last few months and may actually be approaching a breakup point.

Renergen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Renergen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Impala Platinum and Renergen

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

The idea behind Impala Platinum Holdings and Renergen 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.