Correlation Between Triple Flag and Impala Platinum

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

By analyzing existing cross correlation between Triple Flag Precious and Impala Platinum Holdings, you can compare the effects of market volatilities on Triple Flag and Impala Platinum 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 Triple Flag with a short position of Impala Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triple Flag and Impala Platinum.

Diversification Opportunities for Triple Flag and Impala Platinum

0.48

Correlation Coefficient

Triple Flag  Impala Platinum

Very weak diversification

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

Pair Corralation between Triple Flag and Impala Platinum

Given the investment horizon of 90 days Triple Flag Precious is expected to under-perform the Impala Platinum. But the stock apears to be less risky and, when comparing its historical volatility, Triple Flag Precious is 1.4 times less risky than Impala Platinum. The stock trades about -0.07 of its potential returns per unit of risk. The Impala Platinum Holdings is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  554.00  in Impala Platinum Holdings on September 23, 2024 and sell it today you would lose (38.00) from holding Impala Platinum Holdings or give up 6.86% of portfolio value over 90 days.

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

Triple Flag Precious  vs.  Impala Platinum Holdings

Triple Flag Precious

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Triple Flag Precious has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Impala Platinum Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Triple Flag and Impala Platinum

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

The idea behind Triple Flag Precious and Impala Platinum Holdings 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.