Correlation Between Platinum Investment and CeoTronics

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

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

Diversification Opportunities for Platinum Investment and CeoTronics

-0.4

Correlation Coefficient

Platinum Investment  CeoTronics

Very good diversification

The 3 months correlation between Platinum and CeoTronics is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Investment Management and CeoTronics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CeoTronics AG and Platinum Investment 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 Investment Management are associated (or correlated) with CeoTronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CeoTronics AG has no effect on the direction of Platinum Investment i.e., Platinum Investment and CeoTronics go up and down completely randomly.

Pair Corralation between Platinum Investment and CeoTronics

Assuming the 90 days horizon Platinum Investment is expected to generate 5.02 times less return on investment than CeoTronics. In addition to that, Platinum Investment is 1.39 times more volatile than CeoTronics AG. It trades about 0.02 of its total potential returns per unit of risk. CeoTronics AG is currently generating about 0.14 per unit of volatility. If you would invest  530.00  in CeoTronics AG on November 20, 2024 and sell it today you would earn a total of  120.00  from holding CeoTronics AG or generate 22.64% return on investment over 90 days.

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

Platinum Investment Management  vs.  CeoTronics AG

Platinum Investment

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Platinum Investment Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Platinum Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CeoTronics AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CeoTronics AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating forward-looking signals, CeoTronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Platinum Investment and CeoTronics

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

The idea behind Platinum Investment Management and CeoTronics AG 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.