Correlation Between Australian Strategic and Platinum Asia
Can any of the company-specific risk be diversified away by investing in both Australian Strategic and Platinum Asia 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 Australian Strategic and Platinum Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Strategic Materials and Platinum Asia Investments, you can compare the effects of market volatilities on Australian Strategic and Platinum Asia 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 Australian Strategic with a short position of Platinum Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Strategic and Platinum Asia.
Diversification Opportunities for Australian Strategic and Platinum Asia
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Australian and Platinum is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Australian Strategic Materials and Platinum Asia Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Asia Investments and Australian Strategic 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 Australian Strategic Materials are associated (or correlated) with Platinum Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Asia Investments has no effect on the direction of Australian Strategic i.e., Australian Strategic and Platinum Asia go up and down completely randomly.
Pair Corralation between Australian Strategic and Platinum Asia
Assuming the 90 days trading horizon Australian Strategic Materials is expected to under-perform the Platinum Asia. In addition to that, Australian Strategic is 2.76 times more volatile than Platinum Asia Investments. It trades about -0.18 of its total potential returns per unit of risk. Platinum Asia Investments is currently generating about 0.1 per unit of volatility. If you would invest 102.00 in Platinum Asia Investments on December 30, 2024 and sell it today you would earn a total of 6.00 from holding Platinum Asia Investments or generate 5.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Australian Strategic Materials vs. Platinum Asia Investments
Performance |
Timeline |
Australian Strategic |
Platinum Asia Investments |
Australian Strategic and Platinum Asia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Australian Strategic and Platinum Asia
The main advantage of trading using opposite Australian Strategic and Platinum Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Strategic position performs unexpectedly, Platinum Asia 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 Asia will offset losses from the drop in Platinum Asia's long position.Australian Strategic vs. Air New Zealand | Australian Strategic vs. Ras Technology Holdings | Australian Strategic vs. Alternative Investment Trust | Australian Strategic vs. Carlton Investments |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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