Correlation Between Rough Rice and Platinum

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

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

Diversification Opportunities for Rough Rice and Platinum

0.03

Correlation Coefficient

Rough Rice  Platinum

Significant diversification

The 3 months correlation between Rough and Platinum is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Rough Rice Futures and Platinum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum and Rough Rice 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 Rough Rice Futures are associated (or correlated) with Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum has no effect on the direction of Rough Rice i.e., Rough Rice and Platinum go up and down completely randomly.

Pair Corralation between Rough Rice and Platinum

Assuming the 90 days horizon Rough Rice Futures is expected to generate 0.6 times more return on investment than Platinum. However, Rough Rice Futures is 1.67 times less risky than Platinum. It trades about 0.04 of its potential returns per unit of risk. Platinum is currently generating about 0.01 per unit of risk. If you would invest  1,479  in Rough Rice Futures on August 30, 2024 and sell it today you would earn a total of  38.00  from holding Rough Rice Futures or generate 2.57% return on investment over 90 days.

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

Rough Rice Futures  vs.  Platinum

Rough Rice Futures

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rough Rice Futures are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Rough Rice is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Platinum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Platinum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Platinum is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Rough Rice and Platinum

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

The idea behind Rough Rice Futures and Platinum 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.