Correlation Between Growthpoint Properties and Impala Platinum

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

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

Diversification Opportunities for Growthpoint Properties and Impala Platinum

-0.12

Correlation Coefficient

Growthpoint Properties  Impala Platinum

Good diversification

The 3 months correlation between Growthpoint and Impala is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Growthpoint Properties and Impala Platinum Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impala Platinum Holdings and Growthpoint Properties 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 Growthpoint Properties are associated (or correlated) with Impala Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impala Platinum Holdings has no effect on the direction of Growthpoint Properties i.e., Growthpoint Properties and Impala Platinum go up and down completely randomly.

Pair Corralation between Growthpoint Properties and Impala Platinum

Assuming the 90 days trading horizon Growthpoint Properties is expected to generate 0.46 times more return on investment than Impala Platinum. However, Growthpoint Properties is 2.2 times less risky than Impala Platinum. It trades about -0.07 of its potential returns per unit of risk. Impala Platinum Holdings is currently generating about -0.18 per unit of risk. If you would invest  131,000  in Growthpoint Properties on September 24, 2024 and sell it today you would lose (1,800) from holding Growthpoint Properties or give up 1.37% of portfolio value over 90 days.

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

Growthpoint Properties  vs.  Impala Platinum Holdings

Growthpoint Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Growthpoint Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Growthpoint Properties is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Impala Platinum Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impala Platinum Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Growthpoint Properties and Impala Platinum

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

The idea behind Growthpoint Properties and Impala Platinum Holdings 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.