Correlation Between Platinum Group and Buyer Group

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

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

Diversification Opportunities for Platinum Group and Buyer Group

-0.66

Correlation Coefficient

Platinum Group  Buyer Group

Excellent diversification

The 3 months correlation between Platinum and Buyer is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Group Metals and Buyer Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buyer Group International and Platinum Group 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 Group Metals are associated (or correlated) with Buyer Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buyer Group International has no effect on the direction of Platinum Group i.e., Platinum Group and Buyer Group go up and down completely randomly.

Pair Corralation between Platinum Group and Buyer Group

Considering the 90-day investment horizon Platinum Group is expected to generate 1.5 times less return on investment than Buyer Group. But when comparing it to its historical volatility, Platinum Group Metals is 1.89 times less risky than Buyer Group. It trades about 0.02 of its potential returns per unit of risk. Buyer Group International is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  0.35  in Buyer Group International on September 14, 2024 and sell it today you would lose (0.20) from holding Buyer Group International or give up 57.14% of portfolio value over 90 days.

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

Platinum Group Metals  vs.  Buyer Group International

Platinum Group Metals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Platinum Group Metals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating essential indicators, Platinum Group reported solid returns over the last few months and may actually be approaching a breakup point.

Buyer Group International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Platinum Group and Buyer Group

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

The idea behind Platinum Group Metals and Buyer Group International 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.