Correlation Between Platinum Investment and Gentex

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

Diversification Opportunities for Platinum Investment and Gentex

-0.6

Correlation Coefficient

Platinum Investment  Gentex

Excellent diversification

The 3 months correlation between Platinum and Gentex is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Investment Management and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex 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 Gentex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentex has no effect on the direction of Platinum Investment i.e., Platinum Investment and Gentex go up and down completely randomly.

Pair Corralation between Platinum Investment and Gentex

Assuming the 90 days horizon Platinum Investment Management is expected to generate 5.24 times more return on investment than Gentex. However, Platinum Investment is 5.24 times more volatile than Gentex. It trades about 0.07 of its potential returns per unit of risk. Gentex is currently generating about -0.19 per unit of risk. If you would invest  40.00  in Platinum Investment Management on October 6, 2024 and sell it today you would earn a total of  2.00  from holding Platinum Investment Management or generate 5.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

Platinum Investment Management  vs.  Gentex

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Gentex

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gentex are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Gentex is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Platinum Investment and Gentex

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

The idea behind Platinum Investment Management and Gentex 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.