Correlation Between Mount Gibson and Platinum Asia

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

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

Diversification Opportunities for Mount Gibson and Platinum Asia

0.55

Correlation Coefficient

Mount Gibson  Platinum Asia

Very weak diversification

The 3 months correlation between Mount and Platinum is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Mount Gibson Iron 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 Mount Gibson 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 Mount Gibson Iron 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 Mount Gibson i.e., Mount Gibson and Platinum Asia go up and down completely randomly.

Pair Corralation between Mount Gibson and Platinum Asia

Assuming the 90 days trading horizon Mount Gibson Iron is expected to under-perform the Platinum Asia. In addition to that, Mount Gibson is 2.24 times more volatile than Platinum Asia Investments. It trades about -0.06 of its total potential returns per unit of risk. Platinum Asia Investments is currently generating about 0.07 per unit of volatility. If you would invest  82.00  in Platinum Asia Investments on September 23, 2024 and sell it today you would earn a total of  19.00  from holding Platinum Asia Investments or generate 23.17% return on investment over 90 days.

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

Mount Gibson Iron  vs.  Platinum Asia Investments

Mount Gibson Iron

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mount Gibson Iron are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Mount Gibson is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Platinum Asia Investments

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Platinum Asia Investments are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Platinum Asia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mount Gibson and Platinum Asia

The main advantage of trading using opposite Mount Gibson and Platinum Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mount Gibson 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 Mount Gibson Iron 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.