Correlation Between Solaris Resources and Platinum Group

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

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

Diversification Opportunities for Solaris Resources and Platinum Group

-0.51

Correlation Coefficient

Solaris Resources  Platinum Group

Excellent diversification

The 3 months correlation between Solaris and Platinum is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Solaris Resources and Platinum Group Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Group Metals and Solaris Resources 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 Solaris Resources are associated (or correlated) with Platinum Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Group Metals has no effect on the direction of Solaris Resources i.e., Solaris Resources and Platinum Group go up and down completely randomly.

Pair Corralation between Solaris Resources and Platinum Group

Given the investment horizon of 90 days Solaris Resources is expected to generate 18.21 times less return on investment than Platinum Group. But when comparing it to its historical volatility, Solaris Resources is 1.21 times less risky than Platinum Group. It trades about 0.0 of its potential returns per unit of risk. Platinum Group Metals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  106.00  in Platinum Group Metals on October 3, 2024 and sell it today you would earn a total of  22.00  from holding Platinum Group Metals or generate 20.75% return on investment over 90 days.

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

Solaris Resources  vs.  Platinum Group Metals

Solaris Resources

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Solaris Resources are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Solaris Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Platinum Group Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Platinum Group Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Solaris Resources and Platinum Group

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

The idea behind Solaris Resources and Platinum Group Metals 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.