Correlation Between Platinum Asia and Air New

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Can any of the company-specific risk be diversified away by investing in both Platinum Asia and Air New 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 Platinum Asia and Air New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Platinum Asia Investments and Air New Zealand, you can compare the effects of market volatilities on Platinum Asia and Air New 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 Platinum Asia with a short position of Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Platinum Asia and Air New.

Diversification Opportunities for Platinum Asia and Air New

-0.39
  Correlation Coefficient

Very good diversification

The 3 months correlation between Platinum and Air is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Asia Investments and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand and Platinum Asia 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 Platinum Asia Investments are associated (or correlated) with Air New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of Platinum Asia i.e., Platinum Asia and Air New go up and down completely randomly.

Pair Corralation between Platinum Asia and Air New

Assuming the 90 days trading horizon Platinum Asia Investments is expected to under-perform the Air New. But the stock apears to be less risky and, when comparing its historical volatility, Platinum Asia Investments is 1.18 times less risky than Air New. The stock trades about -0.07 of its potential returns per unit of risk. The Air New Zealand is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  48.00  in Air New Zealand on September 26, 2024 and sell it today you would earn a total of  6.00  from holding Air New Zealand or generate 12.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Platinum Asia Investments  vs.  Air New Zealand

 Performance 
       Timeline  
Platinum Asia Investments 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Platinum Asia Investments are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Platinum Asia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
Air New Zealand 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Air New Zealand are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Air New may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Platinum Asia and Air New Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Platinum Asia and Air New

The main advantage of trading using opposite Platinum Asia and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Platinum Asia position performs unexpectedly, Air New 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 Air New will offset losses from the drop in Air New's long position.
The idea behind Platinum Asia Investments and Air New Zealand 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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