Correlation Between Betashares Australian and Platinum Asia

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

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

Diversification Opportunities for Betashares Australian and Platinum Asia

-0.08

Correlation Coefficient

Betashares Australian  Platinum Asia

Good diversification

The 3 months correlation between Betashares and Platinum is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Betashares Australian Cash and Platinum Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Asia and Betashares Australian 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 Betashares Australian Cash 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 has no effect on the direction of Betashares Australian i.e., Betashares Australian and Platinum Asia go up and down completely randomly.

Pair Corralation between Betashares Australian and Platinum Asia

Assuming the 90 days trading horizon Betashares Australian Cash is expected to generate 0.03 times more return on investment than Platinum Asia. However, Betashares Australian Cash is 36.45 times less risky than Platinum Asia. It trades about 0.74 of its potential returns per unit of risk. Platinum Asia is currently generating about -0.02 per unit of risk. If you would invest  4,961  in Betashares Australian Cash on October 26, 2024 and sell it today you would earn a total of  57.00  from holding Betashares Australian Cash or generate 1.15% return on investment over 90 days.

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

Betashares Australian Cash  vs.  Platinum Asia

Betashares Australian

Risk-Adjusted Performance

58 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Betashares Australian Cash are ranked lower than 58 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Betashares Australian is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Platinum Asia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Platinum Asia has generated negative risk-adjusted returns adding no value to fund investors. In spite of comparatively stable basic indicators, Platinum Asia is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Betashares Australian and Platinum Asia

The main advantage of trading using opposite Betashares Australian and Platinum Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Betashares Australian 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 Betashares Australian Cash and Platinum Asia 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.