Correlation Between Platinum Group and Golden Minerals

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

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

Diversification Opportunities for Platinum Group and Golden Minerals

0.82

Correlation Coefficient

Platinum Group  Golden Minerals

Very poor diversification

The 3 months correlation between Platinum and Golden is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Group Metals and Golden Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Minerals and Platinum Group 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 Group Metals are associated (or correlated) with Golden Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Minerals has no effect on the direction of Platinum Group i.e., Platinum Group and Golden Minerals go up and down completely randomly.

Pair Corralation between Platinum Group and Golden Minerals

Considering the 90-day investment horizon Platinum Group Metals is expected to generate 0.64 times more return on investment than Golden Minerals. However, Platinum Group Metals is 1.56 times less risky than Golden Minerals. It trades about -0.03 of its potential returns per unit of risk. Golden Minerals is currently generating about -0.17 per unit of risk. If you would invest  153.00  in Platinum Group Metals on September 26, 2024 and sell it today you would lose (25.00) from holding Platinum Group Metals or give up 16.34% of portfolio value over 90 days.

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

Platinum Group Metals  vs.  Golden Minerals

Platinum Group Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Platinum Group Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Golden Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Platinum Group and Golden Minerals

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

The idea behind Platinum Group Metals and Golden Minerals 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.