Correlation Between Platinum Asset and Alternative Investment

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

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

Diversification Opportunities for Platinum Asset and Alternative Investment

0.45

Correlation Coefficient

Platinum Asset  Alternative Investment

Very weak diversification

The 3 months correlation between Platinum and Alternative is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Asset Management and Alternative Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Investment and Platinum Asset 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 Asset Management are associated (or correlated) with Alternative Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Investment has no effect on the direction of Platinum Asset i.e., Platinum Asset and Alternative Investment go up and down completely randomly.

Pair Corralation between Platinum Asset and Alternative Investment

Assuming the 90 days trading horizon Platinum Asset Management is expected to under-perform the Alternative Investment. In addition to that, Platinum Asset is 10.67 times more volatile than Alternative Investment Trust. It trades about -0.43 of its total potential returns per unit of risk. Alternative Investment Trust is currently generating about -0.21 per unit of volatility. If you would invest  145.00  in Alternative Investment Trust on August 31, 2024 and sell it today you would lose (1.00) from holding Alternative Investment Trust or give up 0.69% of portfolio value over 90 days.

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

Platinum Asset Management  vs.  Alternative Investment Trust

Platinum Asset Management

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Platinum Asset Management are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Platinum Asset unveiled solid returns over the last few months and may actually be approaching a breakup point.

Alternative Investment

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alternative Investment Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alternative Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Platinum Asset and Alternative Investment

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

The idea behind Platinum Asset Management and Alternative Investment Trust 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.