Correlation Between Impala Platinum and AbraSilver Resource

Can any of the company-specific risk be diversified away by investing in both Impala Platinum and AbraSilver Resource 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 AbraSilver Resource 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 AbraSilver Resource Corp, you can compare the effects of market volatilities on Impala Platinum and AbraSilver Resource 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 AbraSilver Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impala Platinum and AbraSilver Resource.

Diversification Opportunities for Impala Platinum and AbraSilver Resource

0.87

Correlation Coefficient

Impala Platinum  AbraSilver Resource

Very poor diversification

The 3 months correlation between Impala and AbraSilver is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Impala Platinum Holdings and AbraSilver Resource Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbraSilver Resource Corp 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 AbraSilver Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbraSilver Resource Corp has no effect on the direction of Impala Platinum i.e., Impala Platinum and AbraSilver Resource go up and down completely randomly.

Pair Corralation between Impala Platinum and AbraSilver Resource

Assuming the 90 days horizon Impala Platinum Holdings is expected to generate 1.18 times more return on investment than AbraSilver Resource. However, Impala Platinum is 1.18 times more volatile than AbraSilver Resource Corp. It trades about 0.13 of its potential returns per unit of risk. AbraSilver Resource Corp is currently generating about 0.1 per unit of risk. If you would invest  440.00  in Impala Platinum Holdings on September 2, 2024 and sell it today you would earn a total of  147.00  from holding Impala Platinum Holdings or generate 33.41% return on investment over 90 days.

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

Impala Platinum Holdings  vs.  AbraSilver Resource Corp

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 fairly weak basic indicators, Impala Platinum showed solid returns over the last few months and may actually be approaching a breakup point.

AbraSilver Resource Corp

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Impala Platinum and AbraSilver Resource

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

The idea behind Impala Platinum Holdings and AbraSilver Resource Corp 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.