Correlation Between Platinum Investment and TOREX SEMICONDUCTOR

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

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

Diversification Opportunities for Platinum Investment and TOREX SEMICONDUCTOR

0.79

Correlation Coefficient

Platinum Investment  TOREX SEMICONDUCTOR

Poor diversification

The 3 months correlation between Platinum and TOREX is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Investment Management and TOREX SEMICONDUCTOR LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOREX SEMICONDUCTOR LTD and Platinum Investment 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 Platinum Investment Management are associated (or correlated) with TOREX SEMICONDUCTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOREX SEMICONDUCTOR LTD has no effect on the direction of Platinum Investment i.e., Platinum Investment and TOREX SEMICONDUCTOR go up and down completely randomly.

Pair Corralation between Platinum Investment and TOREX SEMICONDUCTOR

Assuming the 90 days horizon Platinum Investment Management is expected to generate 1.98 times more return on investment than TOREX SEMICONDUCTOR. However, Platinum Investment is 1.98 times more volatile than TOREX SEMICONDUCTOR LTD. It trades about -0.07 of its potential returns per unit of risk. TOREX SEMICONDUCTOR LTD is currently generating about -0.25 per unit of risk. If you would invest  46.00  in Platinum Investment Management on September 26, 2024 and sell it today you would lose (7.00) from holding Platinum Investment Management or give up 15.22% of portfolio value over 90 days.

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

Platinum Investment Management  vs.  TOREX SEMICONDUCTOR LTD

Platinum Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Platinum Investment Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Platinum Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

TOREX SEMICONDUCTOR LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TOREX SEMICONDUCTOR LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Platinum Investment and TOREX SEMICONDUCTOR

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

The idea behind Platinum Investment Management and TOREX SEMICONDUCTOR LTD 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.