Correlation Between Impala Platinum and Defiance Silver

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

Diversification Opportunities for Impala Platinum and Defiance Silver

0.31

Correlation Coefficient

Impala Platinum  Defiance Silver

Weak diversification

The 3 months correlation between Impala and Defiance is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Impala Platinum Holdings and Defiance Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defiance Silver 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 Defiance Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defiance Silver Corp has no effect on the direction of Impala Platinum i.e., Impala Platinum and Defiance Silver go up and down completely randomly.

Pair Corralation between Impala Platinum and Defiance Silver

Assuming the 90 days horizon Impala Platinum Holdings is expected to generate 0.61 times more return on investment than Defiance Silver. However, Impala Platinum Holdings is 1.64 times less risky than Defiance Silver. It trades about 0.13 of its potential returns per unit of risk. Defiance Silver Corp is currently generating about 0.02 per unit of risk. If you would invest  440.00  in Impala Platinum Holdings on August 31, 2024 and sell it today you would earn a total of  145.00  from holding Impala Platinum Holdings or generate 32.95% return on investment over 90 days.

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

Impala Platinum Holdings  vs.  Defiance Silver 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.

Defiance Silver Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Defiance Silver Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Defiance Silver may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Impala Platinum and Defiance Silver

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

The idea behind Impala Platinum Holdings and Defiance Silver 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.