Correlation Between Alien Metals and Platinum Group

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

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

Diversification Opportunities for Alien Metals and Platinum Group

-0.28

Correlation Coefficient

Alien Metals  Platinum Group

Very good diversification

The 3 months correlation between Alien and Platinum is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Alien Metals and Platinum Group Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Group Metals 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 Platinum Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Group Metals has no effect on the direction of Alien Metals i.e., Alien Metals and Platinum Group go up and down completely randomly.

Pair Corralation between Alien Metals and Platinum Group

Assuming the 90 days horizon Alien Metals is expected to generate 26.69 times more return on investment than Platinum Group. However, Alien Metals is 26.69 times more volatile than Platinum Group Metals. It trades about 0.15 of its potential returns per unit of risk. Platinum Group Metals is currently generating about -0.03 per unit of risk. If you would invest  0.27  in Alien Metals on September 26, 2024 and sell it today you would lose (0.04) from holding Alien Metals or give up 14.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Alien Metals  vs.  Platinum Group Metals

Alien Metals

Risk-Adjusted Performance

11 of 100

Good

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

Platinum Group Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Platinum Group Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Alien Metals and Platinum Group

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

The idea behind Alien Metals and Platinum Group Metals 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.