Correlation Between Platinum Investment and Equinix

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

Diversification Opportunities for Platinum Investment and Equinix

-0.83

Correlation Coefficient

Platinum Investment  Equinix

Pay attention - limited upside

The 3 months correlation between Platinum and Equinix is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Investment Management and Equinix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinix 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 Equinix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinix has no effect on the direction of Platinum Investment i.e., Platinum Investment and Equinix go up and down completely randomly.

Pair Corralation between Platinum Investment and Equinix

Assuming the 90 days horizon Platinum Investment Management is expected to generate 2.82 times more return on investment than Equinix. However, Platinum Investment is 2.82 times more volatile than Equinix. It trades about 0.31 of its potential returns per unit of risk. Equinix is currently generating about -0.11 per unit of risk. If you would invest  33.00  in Platinum Investment Management on October 9, 2024 and sell it today you would earn a total of  9.00  from holding Platinum Investment Management or generate 27.27% return on investment over 90 days.

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

Platinum Investment Management  vs.  Equinix

Platinum Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Platinum Investment Management has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Equinix

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Equinix are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Equinix reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Platinum Investment and Equinix

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

The idea behind Platinum Investment Management and Equinix 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.