Correlation Between Liontown Resources and Platinum Asset

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

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

Diversification Opportunities for Liontown Resources and Platinum Asset

0.91

Correlation Coefficient

Liontown Resources  Platinum Asset

Almost no diversification

The 3 months correlation between Liontown and Platinum is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Liontown Resources and Platinum Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Asset Management and Liontown Resources 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 Liontown Resources are associated (or correlated) with Platinum Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Asset Management has no effect on the direction of Liontown Resources i.e., Liontown Resources and Platinum Asset go up and down completely randomly.

Pair Corralation between Liontown Resources and Platinum Asset

Assuming the 90 days trading horizon Liontown Resources is expected to under-perform the Platinum Asset. But the stock apears to be less risky and, when comparing its historical volatility, Liontown Resources is 1.07 times less risky than Platinum Asset. The stock trades about -0.14 of its potential returns per unit of risk. The Platinum Asset Management is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  68.00  in Platinum Asset Management on October 9, 2024 and sell it today you would earn a total of  2.00  from holding Platinum Asset Management or generate 2.94% return on investment over 90 days.

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

Liontown Resources  vs.  Platinum Asset Management

Liontown Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liontown Resources 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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Platinum Asset Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Platinum Asset Management 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 primary indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Liontown Resources and Platinum Asset

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

The idea behind Liontown Resources and Platinum Asset Management 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.

Check out your portfolio center.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.