Correlation Between Eldorado Gold and Platinum Group

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

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

Diversification Opportunities for Eldorado Gold and Platinum Group

0.54

Correlation Coefficient

Eldorado Gold  Platinum Group

Very weak diversification

The 3 months correlation between Eldorado and Platinum is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp 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 Eldorado Gold 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 Eldorado Gold Corp 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 Eldorado Gold i.e., Eldorado Gold and Platinum Group go up and down completely randomly.

Pair Corralation between Eldorado Gold and Platinum Group

Considering the 90-day investment horizon Eldorado Gold Corp is expected to generate 0.56 times more return on investment than Platinum Group. However, Eldorado Gold Corp is 1.79 times less risky than Platinum Group. It trades about 0.06 of its potential returns per unit of risk. Platinum Group Metals is currently generating about 0.01 per unit of risk. If you would invest  991.00  in Eldorado Gold Corp on October 3, 2024 and sell it today you would earn a total of  496.00  from holding Eldorado Gold Corp or generate 50.05% return on investment over 90 days.

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

Eldorado Gold Corp  vs.  Platinum Group Metals

Eldorado Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eldorado Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 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 Eldorado Gold and Platinum Group

The main advantage of trading using opposite Eldorado Gold and Platinum Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold 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 Eldorado Gold Corp 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.