Correlation Between Platinum Asia and Blackrock Municipal

Can any of the company-specific risk be diversified away by investing in both Platinum Asia and Blackrock Municipal 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 Blackrock Municipal 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 Blackrock Municipal Target, you can compare the effects of market volatilities on Platinum Asia and Blackrock Municipal 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 Blackrock Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Platinum Asia and Blackrock Municipal.

Diversification Opportunities for Platinum Asia and Blackrock Municipal

0.46

Correlation Coefficient

Platinum Asia  Blackrock Municipal

Very weak diversification

The 3 months correlation between Platinum and Blackrock is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Asia Investments and Blackrock Municipal Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Municipal 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 Blackrock Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Municipal has no effect on the direction of Platinum Asia i.e., Platinum Asia and Blackrock Municipal go up and down completely randomly.

Pair Corralation between Platinum Asia and Blackrock Municipal

Considering the 90-day investment horizon Platinum Asia Investments is expected to generate 2.42 times more return on investment than Blackrock Municipal. However, Platinum Asia is 2.42 times more volatile than Blackrock Municipal Target. It trades about 0.0 of its potential returns per unit of risk. Blackrock Municipal Target is currently generating about -0.14 per unit of risk. If you would invest  1,265  in Platinum Asia Investments on September 15, 2024 and sell it today you would lose (5.00) from holding Platinum Asia Investments or give up 0.4% of portfolio value over 90 days.

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

Platinum Asia Investments  vs.  Blackrock Municipal Target

Platinum Asia Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Platinum Asia Investments has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong basic indicators, Platinum Asia is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Blackrock Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Municipal Target has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Blackrock Municipal is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Platinum Asia and Blackrock Municipal

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

The idea behind Platinum Asia Investments and Blackrock Municipal Target 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.