Correlation Between Golden Minerals and Platinum Group

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

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

Diversification Opportunities for Golden Minerals and Platinum Group

0.82

Correlation Coefficient

Golden Minerals  Platinum Group

Very poor diversification

The 3 months correlation between Golden and Platinum is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Golden Minerals 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 Golden Minerals 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 Golden Minerals 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 Golden Minerals i.e., Golden Minerals and Platinum Group go up and down completely randomly.

Pair Corralation between Golden Minerals and Platinum Group

Given the investment horizon of 90 days Golden Minerals is expected to under-perform the Platinum Group. In addition to that, Golden Minerals is 1.56 times more volatile than Platinum Group Metals. It trades about -0.17 of its total potential returns per unit of risk. Platinum Group Metals is currently generating about -0.03 per unit of volatility. If you would invest  153.00  in Platinum Group Metals on September 26, 2024 and sell it today you would lose (25.00) from holding Platinum Group Metals or give up 16.34% of portfolio value over 90 days.

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

Golden Minerals  vs.  Platinum Group Metals

Golden Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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 Golden Minerals and Platinum Group

The main advantage of trading using opposite Golden Minerals and Platinum Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Minerals 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 Golden Minerals 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.