Correlation Between Platinum Investment and CHINA OIL

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

Diversification Opportunities for Platinum Investment and CHINA OIL

0.48

Correlation Coefficient

Platinum Investment  CHINA OIL

Very weak diversification

The 3 months correlation between Platinum and CHINA is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Investment Management and CHINA OIL AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA OIL AND 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 CHINA OIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA OIL AND has no effect on the direction of Platinum Investment i.e., Platinum Investment and CHINA OIL go up and down completely randomly.

Pair Corralation between Platinum Investment and CHINA OIL

Assuming the 90 days horizon Platinum Investment Management is expected to generate 4.44 times more return on investment than CHINA OIL. However, Platinum Investment is 4.44 times more volatile than CHINA OIL AND. It trades about 0.12 of its potential returns per unit of risk. CHINA OIL AND is currently generating about 0.12 per unit of risk. If you would invest  54.00  in Platinum Investment Management on September 4, 2024 and sell it today you would earn a total of  10.00  from holding Platinum Investment Management or generate 18.52% return on investment over 90 days.

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

Platinum Investment Management  vs.  CHINA OIL AND

Platinum Investment

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Platinum Investment Management are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Platinum Investment reported solid returns over the last few months and may actually be approaching a breakup point.

CHINA OIL AND

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA OIL AND are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CHINA OIL is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Platinum Investment and CHINA OIL

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

The idea behind Platinum Investment Management and CHINA OIL AND 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.