Correlation Between Platinum Group and Compania

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

Diversification Opportunities for Platinum Group and Compania

-0.4

Correlation Coefficient

Platinum Group  Compania

Very good diversification

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

Pair Corralation between Platinum Group and Compania

Considering the 90-day investment horizon Platinum Group Metals is expected to generate 2.88 times more return on investment than Compania. However, Platinum Group is 2.88 times more volatile than Compania de Minas. It trades about 0.04 of its potential returns per unit of risk. Compania de Minas is currently generating about 0.06 per unit of risk. If you would invest  124.00  in Platinum Group Metals on November 28, 2024 and sell it today you would earn a total of  2.00  from holding Platinum Group Metals or generate 1.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Platinum Group Metals  vs.  Compania de Minas

Platinum Group Metals

Risk-Adjusted Performance

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 unfluctuating performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Compania de Minas

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Compania de Minas are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Compania may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Platinum Group and Compania

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

The idea behind Platinum Group Metals and Compania de Minas 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.