Correlation Between PLATO GOLD and FOX P

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

By analyzing existing cross correlation between PLATO GOLD P and FOX P B, you can compare the effects of market volatilities on PLATO GOLD and FOX P 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 PLATO GOLD with a short position of FOX P. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLATO GOLD and FOX P.

Diversification Opportunities for PLATO GOLD and FOX P

-0.31

Correlation Coefficient

PLATO GOLD  FOX P

Very good diversification

The 3 months correlation between PLATO and FOX is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding PLATO GOLD P and FOX P B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOX P B and PLATO GOLD 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 PLATO GOLD P are associated (or correlated) with FOX P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOX P B has no effect on the direction of PLATO GOLD i.e., PLATO GOLD and FOX P go up and down completely randomly.

Pair Corralation between PLATO GOLD and FOX P

Assuming the 90 days horizon PLATO GOLD P is expected to generate 20.29 times more return on investment than FOX P. However, PLATO GOLD is 20.29 times more volatile than FOX P B. It trades about 0.1 of its potential returns per unit of risk. FOX P B is currently generating about 0.21 per unit of risk. If you would invest  1.05  in PLATO GOLD P on September 24, 2024 and sell it today you would lose (0.40) from holding PLATO GOLD P or give up 38.1% of portfolio value over 90 days.

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

PLATO GOLD P  vs.  FOX P B

PLATO GOLD P

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PLATO GOLD P are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PLATO GOLD reported solid returns over the last few months and may actually be approaching a breakup point.

FOX P B

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FOX P B are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FOX P reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PLATO GOLD and FOX P

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

The idea behind PLATO GOLD P and FOX P B 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.