Correlation Between Platinum Asset and Technology One

Can any of the company-specific risk be diversified away by investing in both Platinum Asset and Technology 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 Platinum Asset and Technology One 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 Technology One, you can compare the effects of market volatilities on Platinum Asset and Technology 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 Platinum Asset with a short position of Technology One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Platinum Asset and Technology One.

Diversification Opportunities for Platinum Asset and Technology One

0.71

Correlation Coefficient

Platinum Asset  Technology One

Poor diversification

The 3 months correlation between Platinum and Technology is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Asset Management and Technology One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology One 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 Technology One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology One has no effect on the direction of Platinum Asset i.e., Platinum Asset and Technology One go up and down completely randomly.

Pair Corralation between Platinum Asset and Technology One

Assuming the 90 days trading horizon Platinum Asset Management is expected to under-perform the Technology One. In addition to that, Platinum Asset is 2.14 times more volatile than Technology One. It trades about -0.09 of its total potential returns per unit of risk. Technology One is currently generating about -0.08 per unit of volatility. If you would invest  3,090  in Technology One on December 25, 2024 and sell it today you would lose (252.00) from holding Technology One or give up 8.16% of portfolio value over 90 days.

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

Platinum Asset Management  vs.  Technology One

Platinum Asset Management

Risk-Adjusted Performance

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 uncertain performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Technology One

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Platinum Asset and Technology One

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

The idea behind Platinum Asset Management and Technology One 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.