Correlation Between Eastern Platinum and Cartier Iron

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

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

Diversification Opportunities for Eastern Platinum and Cartier Iron

0.16

Correlation Coefficient

Eastern Platinum  Cartier Iron

Average diversification

The 3 months correlation between Eastern and Cartier is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Platinum Limited and Cartier Iron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cartier Iron Corp and Eastern Platinum 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 Eastern Platinum Limited are associated (or correlated) with Cartier Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cartier Iron Corp has no effect on the direction of Eastern Platinum i.e., Eastern Platinum and Cartier Iron go up and down completely randomly.

Pair Corralation between Eastern Platinum and Cartier Iron

Assuming the 90 days horizon Eastern Platinum is expected to generate 10.3 times less return on investment than Cartier Iron. But when comparing it to its historical volatility, Eastern Platinum Limited is 6.68 times less risky than Cartier Iron. It trades about 0.09 of its potential returns per unit of risk. Cartier Iron Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Cartier Iron Corp on December 21, 2024 and sell it today you would earn a total of  5.00  from holding Cartier Iron Corp or generate 125.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Eastern Platinum Limited  vs.  Cartier Iron Corp

Eastern Platinum

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eastern Platinum Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Eastern Platinum reported solid returns over the last few months and may actually be approaching a breakup point.

Cartier Iron Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cartier Iron Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, Cartier Iron reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eastern Platinum and Cartier Iron

The main advantage of trading using opposite Eastern Platinum and Cartier Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Platinum position performs unexpectedly, Cartier Iron 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 Cartier Iron will offset losses from the drop in Cartier Iron's long position.

The idea behind Eastern Platinum Limited and Cartier Iron Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.