Correlation Between Sylvania Platinum and Informa PLC

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

By analyzing existing cross correlation between Sylvania Platinum Limited and Informa PLC ADR, you can compare the effects of market volatilities on Sylvania Platinum and Informa PLC 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 Sylvania Platinum with a short position of Informa PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sylvania Platinum and Informa PLC.

Diversification Opportunities for Sylvania Platinum and Informa PLC

-0.1

Correlation Coefficient

Sylvania Platinum  Informa PLC

Good diversification

The 3 months correlation between Sylvania and Informa is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sylvania Platinum Limited and Informa PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Informa PLC ADR and Sylvania Platinum 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 Sylvania Platinum Limited are associated (or correlated) with Informa PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Informa PLC ADR has no effect on the direction of Sylvania Platinum i.e., Sylvania Platinum and Informa PLC go up and down completely randomly.

Pair Corralation between Sylvania Platinum and Informa PLC

Assuming the 90 days horizon Sylvania Platinum Limited is expected to under-perform the Informa PLC. In addition to that, Sylvania Platinum is 1.74 times more volatile than Informa PLC ADR. It trades about -0.09 of its total potential returns per unit of risk. Informa PLC ADR is currently generating about 0.0 per unit of volatility. If you would invest  2,184  in Informa PLC ADR on September 3, 2024 and sell it today you would lose (31.00) from holding Informa PLC ADR or give up 1.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Sylvania Platinum Limited  vs.  Informa PLC ADR

Sylvania Platinum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sylvania Platinum Limited 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Informa PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Informa PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Informa PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sylvania Platinum and Informa PLC

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

The idea behind Sylvania Platinum Limited and Informa PLC ADR 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..