Correlation Between Star Royalties and Sylvania Platinum

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

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

Diversification Opportunities for Star Royalties and Sylvania Platinum

-0.49

Correlation Coefficient

Star Royalties  Sylvania Platinum

Very good diversification

The 3 months correlation between Star and Sylvania is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Star Royalties and Sylvania Platinum Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sylvania Platinum and Star Royalties 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 Star Royalties are associated (or correlated) with Sylvania Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sylvania Platinum has no effect on the direction of Star Royalties i.e., Star Royalties and Sylvania Platinum go up and down completely randomly.

Pair Corralation between Star Royalties and Sylvania Platinum

Assuming the 90 days horizon Star Royalties is expected to under-perform the Sylvania Platinum. In addition to that, Star Royalties is 1.29 times more volatile than Sylvania Platinum Limited. It trades about -0.03 of its total potential returns per unit of risk. Sylvania Platinum Limited is currently generating about 0.17 per unit of volatility. If you would invest  54.00  in Sylvania Platinum Limited on December 29, 2024 and sell it today you would earn a total of  18.00  from holding Sylvania Platinum Limited or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Star Royalties  vs.  Sylvania Platinum Limited

Star Royalties

Risk-Adjusted Performance

Very Weak

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

Sylvania Platinum

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sylvania Platinum Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating essential indicators, Sylvania Platinum reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Star Royalties and Sylvania Platinum

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

The idea behind Star Royalties and Sylvania Platinum Limited 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.