Correlation Between Platinum Investment and INDIKA ENERGY

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

Diversification Opportunities for Platinum Investment and INDIKA ENERGY

0.21

Correlation Coefficient

Platinum Investment  INDIKA ENERGY

Modest diversification

The 3 months correlation between Platinum and INDIKA is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Investment Management and INDIKA ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDIKA ENERGY 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 INDIKA ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDIKA ENERGY has no effect on the direction of Platinum Investment i.e., Platinum Investment and INDIKA ENERGY go up and down completely randomly.

Pair Corralation between Platinum Investment and INDIKA ENERGY

Assuming the 90 days horizon Platinum Investment Management is expected to under-perform the INDIKA ENERGY. In addition to that, Platinum Investment is 1.37 times more volatile than INDIKA ENERGY. It trades about -0.04 of its total potential returns per unit of risk. INDIKA ENERGY is currently generating about 0.0 per unit of volatility. If you would invest  9.20  in INDIKA ENERGY on December 1, 2024 and sell it today you would lose (0.30) from holding INDIKA ENERGY or give up 3.26% of portfolio value over 90 days.

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

Platinum Investment Management  vs.  INDIKA ENERGY

Platinum Investment

Risk-Adjusted Performance

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.

INDIKA ENERGY

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Platinum Investment and INDIKA ENERGY

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

The idea behind Platinum Investment Management and INDIKA ENERGY 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.