Correlation Between Invesco California and Platinum Asia

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

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

Diversification Opportunities for Invesco California and Platinum Asia

0.31

Correlation Coefficient

Invesco California  Platinum Asia

Weak diversification

The 3 months correlation between Invesco and Platinum is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Invesco California Value 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 Invesco California 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 Invesco California Value 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 Invesco California i.e., Invesco California and Platinum Asia go up and down completely randomly.

Pair Corralation between Invesco California and Platinum Asia

Considering the 90-day investment horizon Invesco California Value is expected to generate 1.04 times more return on investment than Platinum Asia. However, Invesco California is 1.04 times more volatile than Platinum Asia Investments. It trades about 0.15 of its potential returns per unit of risk. Platinum Asia Investments is currently generating about 0.08 per unit of risk. If you would invest  1,035  in Invesco California Value on December 1, 2024 and sell it today you would earn a total of  74.00  from holding Invesco California Value or generate 7.15% return on investment over 90 days.

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

Invesco California Value  vs.  Platinum Asia Investments

Invesco California Value

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco California Value are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Invesco California may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Platinum Asia Investments

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Platinum Asia Investments are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong basic indicators, Platinum Asia is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Invesco California and Platinum Asia

The main advantage of trading using opposite Invesco California and Platinum Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco California 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 Invesco California Value 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.