Correlation Between Platinum Asset and EP Financial

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

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

Diversification Opportunities for Platinum Asset and EP Financial

0.03

Correlation Coefficient

Platinum Asset  EP Financial

Significant diversification

The 3 months correlation between Platinum and EP1 is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Asset Management and EP Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EP Financial Group and Platinum Asset 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 Asset Management are associated (or correlated) with EP Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EP Financial Group has no effect on the direction of Platinum Asset i.e., Platinum Asset and EP Financial go up and down completely randomly.

Pair Corralation between Platinum Asset and EP Financial

Assuming the 90 days trading horizon Platinum Asset Management is expected to under-perform the EP Financial. But the stock apears to be less risky and, when comparing its historical volatility, Platinum Asset Management is 1.19 times less risky than EP Financial. The stock trades about -0.06 of its potential returns per unit of risk. The EP Financial Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  43.00  in EP Financial Group on September 13, 2024 and sell it today you would earn a total of  9.00  from holding EP Financial Group or generate 20.93% return on investment over 90 days.

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

Platinum Asset Management  vs.  EP Financial Group

Platinum Asset Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Platinum Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

EP Financial Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EP Financial Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, EP Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Platinum Asset and EP Financial

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

The idea behind Platinum Asset Management and EP Financial Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.