Correlation Between Platinum and Peace Living

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

By analyzing existing cross correlation between The Platinum Group and Peace Living PCL, you can compare the effects of market volatilities on Platinum and Peace Living 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 with a short position of Peace Living. Check out your portfolio center. Please also check ongoing floating volatility patterns of Platinum and Peace Living.

Diversification Opportunities for Platinum and Peace Living

-0.14

Correlation Coefficient

Platinum  Peace Living

Good diversification

The 3 months correlation between Platinum and Peace is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding The Platinum Group and Peace Living PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peace Living PCL and Platinum 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 The Platinum Group are associated (or correlated) with Peace Living. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peace Living PCL has no effect on the direction of Platinum i.e., Platinum and Peace Living go up and down completely randomly.

Pair Corralation between Platinum and Peace Living

Assuming the 90 days trading horizon The Platinum Group is expected to generate 149.78 times more return on investment than Peace Living. However, Platinum is 149.78 times more volatile than Peace Living PCL. It trades about 0.13 of its potential returns per unit of risk. Peace Living PCL is currently generating about -0.12 per unit of risk. If you would invest  0.00  in The Platinum Group on September 3, 2024 and sell it today you would earn a total of  232.00  from holding The Platinum Group or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

The Platinum Group  vs.  Peace Living PCL

Platinum Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Platinum Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Platinum disclosed solid returns over the last few months and may actually be approaching a breakup point.

Peace Living PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Peace Living PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Platinum and Peace Living

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

The idea behind The Platinum Group and Peace Living PCL 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.