Correlation Between Alien Metals and Eastern Platinum

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

By analyzing existing cross correlation between Alien Metals and Eastern Platinum Limited, you can compare the effects of market volatilities on Alien Metals and Eastern 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 Alien Metals with a short position of Eastern Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alien Metals and Eastern Platinum.

Diversification Opportunities for Alien Metals and Eastern Platinum

-0.05

Correlation Coefficient

Alien Metals  Eastern Platinum

Good diversification

The 3 months correlation between Alien and Eastern is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Alien Metals and Eastern Platinum Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Platinum and Alien Metals 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 Alien Metals are associated (or correlated) with Eastern Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Platinum has no effect on the direction of Alien Metals i.e., Alien Metals and Eastern Platinum go up and down completely randomly.

Pair Corralation between Alien Metals and Eastern Platinum

Assuming the 90 days horizon Alien Metals is expected to generate 28.27 times more return on investment than Eastern Platinum. However, Alien Metals is 28.27 times more volatile than Eastern Platinum Limited. It trades about 0.16 of its potential returns per unit of risk. Eastern Platinum Limited is currently generating about 0.05 per unit of risk. If you would invest  0.26  in Alien Metals on December 20, 2024 and sell it today you would lose (0.12) from holding Alien Metals or give up 46.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Alien Metals  vs.  Eastern Platinum Limited

Alien Metals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alien Metals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Alien Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Eastern Platinum

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eastern Platinum Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Eastern Platinum reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alien Metals and Eastern Platinum

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

The idea behind Alien Metals and Eastern Platinum Limited 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.