Correlation Between OD6 Metals and Platinum Asia

Can any of the company-specific risk be diversified away by investing in both OD6 Metals 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 OD6 Metals and Platinum Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between OD6 Metals and Platinum Asia Investments, you can compare the effects of market volatilities on OD6 Metals 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 OD6 Metals with a short position of Platinum Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of OD6 Metals and Platinum Asia.

Diversification Opportunities for OD6 Metals and Platinum Asia

0.22

Correlation Coefficient

OD6 Metals  Platinum Asia

Modest diversification

The 3 months correlation between OD6 and Platinum is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding OD6 Metals 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 OD6 Metals 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 OD6 Metals 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 OD6 Metals i.e., OD6 Metals and Platinum Asia go up and down completely randomly.

Pair Corralation between OD6 Metals and Platinum Asia

Assuming the 90 days trading horizon OD6 Metals is expected to under-perform the Platinum Asia. In addition to that, OD6 Metals is 3.41 times more volatile than Platinum Asia Investments. It trades about -0.34 of its total potential returns per unit of risk. Platinum Asia Investments is currently generating about 0.16 per unit of volatility. If you would invest  103.00  in Platinum Asia Investments on December 1, 2024 and sell it today you would earn a total of  5.00  from holding Platinum Asia Investments or generate 4.85% return on investment over 90 days.

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

OD6 Metals  vs.  Platinum Asia Investments

OD6 Metals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in OD6 Metals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, OD6 Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Platinum Asia Investments

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Platinum Asia Investments are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Platinum Asia may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with OD6 Metals and Platinum Asia

The main advantage of trading using opposite OD6 Metals and Platinum Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OD6 Metals 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 OD6 Metals 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.