Correlation Between Pilbara Minerals and Palladium One

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

By analyzing existing cross correlation between Pilbara Minerals Limited and Palladium One Mining, you can compare the effects of market volatilities on Pilbara Minerals and Palladium One 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 Pilbara Minerals with a short position of Palladium One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pilbara Minerals and Palladium One.

Diversification Opportunities for Pilbara Minerals and Palladium One

-0.4

Correlation Coefficient

Pilbara Minerals  Palladium One

Very good diversification

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

Pair Corralation between Pilbara Minerals and Palladium One

If you would invest  3.66  in Palladium One Mining on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Palladium One Mining or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Pilbara Minerals Limited  vs.  Palladium One Mining

Pilbara Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pilbara Minerals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental drivers remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Palladium One Mining

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pilbara Minerals and Palladium One

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

The idea behind Pilbara Minerals Limited and Palladium One Mining 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.