Correlation Between Retail Food and Platinum Asia

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

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

Diversification Opportunities for Retail Food and Platinum Asia

-0.47

Correlation Coefficient

Retail Food  Platinum Asia

Very good diversification

The 3 months correlation between Retail and Platinum is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Retail Food Group and Platinum Asia Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Asia Investments and Retail Food 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 Retail Food Group are associated (or correlated) with Platinum Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Asia Investments has no effect on the direction of Retail Food i.e., Retail Food and Platinum Asia go up and down completely randomly.

Pair Corralation between Retail Food and Platinum Asia

Assuming the 90 days trading horizon Retail Food Group is expected to under-perform the Platinum Asia. In addition to that, Retail Food is 5.06 times more volatile than Platinum Asia Investments. It trades about -0.31 of its total potential returns per unit of risk. Platinum Asia Investments is currently generating about 0.08 per unit of volatility. If you would invest  101.00  in Platinum Asia Investments on October 13, 2024 and sell it today you would earn a total of  1.00  from holding Platinum Asia Investments or generate 0.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Retail Food Group  vs.  Platinum Asia Investments

Retail Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Retail Food Group 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.

Platinum Asia Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Platinum Asia Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Platinum Asia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Retail Food and Platinum Asia

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

The idea behind Retail Food Group and Platinum Asia Investments 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.