Correlation Between Sylvania Platinum and Legible

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

Diversification Opportunities for Sylvania Platinum and Legible

0.83

Correlation Coefficient

Sylvania Platinum  Legible

Very poor diversification

The 3 months correlation between Sylvania and Legible is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sylvania Platinum Limited and Legible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legible 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 Legible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legible has no effect on the direction of Sylvania Platinum i.e., Sylvania Platinum and Legible go up and down completely randomly.

Pair Corralation between Sylvania Platinum and Legible

Assuming the 90 days horizon Sylvania Platinum Limited is expected to under-perform the Legible. But the otc stock apears to be less risky and, when comparing its historical volatility, Sylvania Platinum Limited is 1.79 times less risky than Legible. The otc stock trades about -0.01 of its potential returns per unit of risk. The Legible is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  7.59  in Legible on October 7, 2024 and sell it today you would lose (4.59) from holding Legible or give up 60.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	74.3%
Values	Daily Returns

Sylvania Platinum Limited  vs.  Legible

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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Legible

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Legible has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sylvania Platinum and Legible

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

The idea behind Sylvania Platinum Limited and Legible 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.