Correlation Between EROAD and Platinum Asia

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

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

Diversification Opportunities for EROAD and Platinum Asia

-0.41

Correlation Coefficient

EROAD  Platinum Asia

Very good diversification

The 3 months correlation between EROAD and Platinum is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding EROAD and Platinum Asia Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Asia Investments and EROAD 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 EROAD are associated (or correlated) with Platinum Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Asia Investments has no effect on the direction of EROAD i.e., EROAD and Platinum Asia go up and down completely randomly.

Pair Corralation between EROAD and Platinum Asia

Assuming the 90 days trading horizon EROAD is expected to generate 2.08 times more return on investment than Platinum Asia. However, EROAD is 2.08 times more volatile than Platinum Asia Investments. It trades about 0.16 of its potential returns per unit of risk. Platinum Asia Investments is currently generating about 0.13 per unit of risk. If you would invest  80.00  in EROAD on September 19, 2024 and sell it today you would earn a total of  6.00  from holding EROAD or generate 7.5% return on investment over 90 days.

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

EROAD  vs.  Platinum Asia Investments

EROAD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EROAD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Platinum Asia Investments

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Platinum Asia Investments are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Platinum Asia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with EROAD and Platinum Asia

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

The idea behind EROAD and Platinum Asia Investments 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.