Correlation Between GUARDANT HEALTH and Platinum Investment

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

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

Diversification Opportunities for GUARDANT HEALTH and Platinum Investment

-0.82

Correlation Coefficient

GUARDANT HEALTH  Platinum Investment

Pay attention - limited upside

The 3 months correlation between GUARDANT and Platinum is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding GUARDANT HEALTH CL and Platinum Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Investment and GUARDANT HEALTH 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 GUARDANT HEALTH CL 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 GUARDANT HEALTH i.e., GUARDANT HEALTH and Platinum Investment go up and down completely randomly.

Pair Corralation between GUARDANT HEALTH and Platinum Investment

Assuming the 90 days horizon GUARDANT HEALTH CL is expected to generate 1.16 times more return on investment than Platinum Investment. However, GUARDANT HEALTH is 1.16 times more volatile than Platinum Investment Management. It trades about 0.15 of its potential returns per unit of risk. Platinum Investment Management is currently generating about -0.02 per unit of risk. If you would invest  2,102  in GUARDANT HEALTH CL on September 24, 2024 and sell it today you would earn a total of  868.00  from holding GUARDANT HEALTH CL or generate 41.29% return on investment over 90 days.

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

GUARDANT HEALTH CL  vs.  Platinum Investment Management

GUARDANT HEALTH CL

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GUARDANT HEALTH CL are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GUARDANT HEALTH reported solid returns over the last few months and may actually be approaching a breakup point.

Platinum Investment

Risk-Adjusted Performance

0 of 100

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 nearly stable basic indicators, Platinum Investment is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GUARDANT HEALTH and Platinum Investment

The main advantage of trading using opposite GUARDANT HEALTH and Platinum Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GUARDANT HEALTH 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 GUARDANT HEALTH CL 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.