Correlation Between IDP EDUCATION and Platinum Investment

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

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

Diversification Opportunities for IDP EDUCATION and Platinum Investment

0.86

Correlation Coefficient

IDP EDUCATION  Platinum Investment

Very poor diversification

The 3 months correlation between IDP and Platinum is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding IDP EDUCATION LTD and Platinum Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Investment and IDP EDUCATION 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 IDP EDUCATION LTD are associated (or correlated) with Platinum Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Investment has no effect on the direction of IDP EDUCATION i.e., IDP EDUCATION and Platinum Investment go up and down completely randomly.

Pair Corralation between IDP EDUCATION and Platinum Investment

Assuming the 90 days horizon IDP EDUCATION LTD is expected to generate 1.38 times more return on investment than Platinum Investment. However, IDP EDUCATION is 1.38 times more volatile than Platinum Investment Management. It trades about -0.02 of its potential returns per unit of risk. Platinum Investment Management is currently generating about -0.05 per unit of risk. If you would invest  674.00  in IDP EDUCATION LTD on December 21, 2024 and sell it today you would lose (89.00) from holding IDP EDUCATION LTD or give up 13.2% of portfolio value over 90 days.

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

IDP EDUCATION LTD  vs.  Platinum Investment Management

IDP EDUCATION LTD

Risk-Adjusted Performance

Very Weak

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

Platinum Investment

Risk-Adjusted Performance

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 uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with IDP EDUCATION and Platinum Investment

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

The idea behind IDP EDUCATION LTD and Platinum Investment Management 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.