Correlation Between First Trust and Platinum Asia

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

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

Diversification Opportunities for First Trust and Platinum Asia

0.64

Correlation Coefficient

First Trust  Platinum Asia

Poor diversification

The 3 months correlation between First and Platinum is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Senior 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 First Trust 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 First Trust Senior 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 First Trust i.e., First Trust and Platinum Asia go up and down completely randomly.

Pair Corralation between First Trust and Platinum Asia

Considering the 90-day investment horizon First Trust Senior is expected to under-perform the Platinum Asia. But the etf apears to be less risky and, when comparing its historical volatility, First Trust Senior is 1.75 times less risky than Platinum Asia. The etf trades about 0.0 of its potential returns per unit of risk. The Platinum Asia Investments is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,246  in Platinum Asia Investments on December 25, 2024 and sell it today you would earn a total of  31.00  from holding Platinum Asia Investments or generate 2.49% return on investment over 90 days.

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

First Trust Senior  vs.  Platinum Asia Investments

First Trust Senior

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Trust Senior has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, First Trust is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Platinum Asia Investments

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Platinum Asia Investments are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong basic indicators, Platinum Asia is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with First Trust and Platinum Asia

The main advantage of trading using opposite First Trust and Platinum Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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 First Trust Senior 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.