Correlation Between Defiance Silver and Eastern Platinum

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

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

Diversification Opportunities for Defiance Silver and Eastern Platinum

0.5

Correlation Coefficient

Defiance Silver  Eastern Platinum

Very weak diversification

The 3 months correlation between Defiance and Eastern is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Defiance Silver Corp and Eastern Platinum Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Platinum and Defiance Silver 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 Defiance Silver Corp 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 Defiance Silver i.e., Defiance Silver and Eastern Platinum go up and down completely randomly.

Pair Corralation between Defiance Silver and Eastern Platinum

Assuming the 90 days horizon Defiance Silver is expected to generate 46.53 times less return on investment than Eastern Platinum. But when comparing it to its historical volatility, Defiance Silver Corp is 1.03 times less risky than Eastern Platinum. It trades about 0.0 of its potential returns per unit of risk. Eastern Platinum Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Eastern Platinum Limited on September 15, 2024 and sell it today you would earn a total of  0.00  from holding Eastern Platinum Limited or generate 0.0% return on investment over 90 days.

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

Defiance Silver Corp  vs.  Eastern Platinum Limited

Defiance Silver Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Defiance Silver Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Eastern Platinum

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eastern Platinum Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Eastern Platinum may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Defiance Silver and Eastern Platinum

The main advantage of trading using opposite Defiance Silver and Eastern Platinum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Defiance Silver 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 Defiance Silver Corp 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.