Correlation Between Polymetal International and Petra Diamonds

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Can any of the company-specific risk be diversified away by investing in both Polymetal International and Petra Diamonds 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 Polymetal International and Petra Diamonds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polymetal International PLC and Petra Diamonds Limited, you can compare the effects of market volatilities on Polymetal International and Petra Diamonds 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 Polymetal International with a short position of Petra Diamonds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polymetal International and Petra Diamonds.

Diversification Opportunities for Polymetal International and Petra Diamonds

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Polymetal and Petra is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Polymetal International PLC and Petra Diamonds Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petra Diamonds and Polymetal International 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 Polymetal International PLC are associated (or correlated) with Petra Diamonds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petra Diamonds has no effect on the direction of Polymetal International i.e., Polymetal International and Petra Diamonds go up and down completely randomly.

Pair Corralation between Polymetal International and Petra Diamonds

If you would invest  34.00  in Petra Diamonds Limited on October 20, 2024 and sell it today you would earn a total of  0.00  from holding Petra Diamonds Limited or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy4.76%
ValuesDaily Returns

Polymetal International PLC  vs.  Petra Diamonds Limited

 Performance 
       Timeline  
Polymetal International 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Polymetal International PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Polymetal International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Petra Diamonds 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Petra Diamonds Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Polymetal International and Petra Diamonds Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Polymetal International and Petra Diamonds

The main advantage of trading using opposite Polymetal International and Petra Diamonds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polymetal International position performs unexpectedly, Petra Diamonds 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 Petra Diamonds will offset losses from the drop in Petra Diamonds' long position.
The idea behind Polymetal International PLC and Petra Diamonds 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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