Correlation Between Generation Mining and Platinum Group

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

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

Diversification Opportunities for Generation Mining and Platinum Group

0.7

Correlation Coefficient

Generation Mining  Platinum Group

Poor diversification

The 3 months correlation between Generation and Platinum is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Generation Mining 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 Generation Mining 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 Generation Mining 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 Generation Mining i.e., Generation Mining and Platinum Group go up and down completely randomly.

Pair Corralation between Generation Mining and Platinum Group

Assuming the 90 days trading horizon Generation Mining is expected to generate 1.13 times more return on investment than Platinum Group. However, Generation Mining is 1.13 times more volatile than Platinum Group Metals. It trades about -0.03 of its potential returns per unit of risk. Platinum Group Metals is currently generating about -0.15 per unit of risk. If you would invest  17.00  in Generation Mining on October 6, 2024 and sell it today you would lose (1.00) from holding Generation Mining or give up 5.88% of portfolio value over 90 days.

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

Generation Mining  vs.  Platinum Group Metals

Generation Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Generation Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic 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. In spite of very healthy primary indicators, Platinum Group is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Generation Mining and Platinum Group

The main advantage of trading using opposite Generation Mining and Platinum Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Generation Mining 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 Generation Mining 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.