Correlation Between Petra Diamonds and Northam Platinum

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

By analyzing existing cross correlation between Petra Diamonds Limited and Northam Platinum Holdings, you can compare the effects of market volatilities on Petra Diamonds and Northam Platinum 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 Petra Diamonds with a short position of Northam Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petra Diamonds and Northam Platinum.

Diversification Opportunities for Petra Diamonds and Northam Platinum

0.0

Correlation Coefficient

Petra Diamonds  Northam Platinum

Pay attention - limited upside

The 3 months correlation between Petra and Northam is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Petra Diamonds Limited and Northam Platinum Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northam Platinum Holdings and Petra Diamonds 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 Petra Diamonds Limited are associated (or correlated) with Northam Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northam Platinum Holdings has no effect on the direction of Petra Diamonds i.e., Petra Diamonds and Northam Platinum go up and down completely randomly.

Pair Corralation between Petra Diamonds and Northam Platinum

If you would invest  34.00  in Petra Diamonds Limited on October 23, 2024 and sell it today you would earn a total of  0.00  from holding Petra Diamonds Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

Petra Diamonds Limited  vs.  Northam Platinum Holdings

Petra Diamonds

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petra Diamonds Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Northam Platinum Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northam Platinum Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Northam Platinum is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Petra Diamonds and Northam Platinum

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

The idea behind Petra Diamonds Limited and Northam Platinum Holdings 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.