Correlation Between Platinum Investment and Applied Materials

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

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

Diversification Opportunities for Platinum Investment and Applied Materials

-0.15

Correlation Coefficient

Platinum Investment  Applied Materials

Good diversification

The 3 months correlation between Platinum and Applied is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Investment Management and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and Platinum Investment 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 Platinum Investment Management are associated (or correlated) with Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of Platinum Investment i.e., Platinum Investment and Applied Materials go up and down completely randomly.

Pair Corralation between Platinum Investment and Applied Materials

Assuming the 90 days horizon Platinum Investment is expected to generate 1.17 times less return on investment than Applied Materials. In addition to that, Platinum Investment is 1.83 times more volatile than Applied Materials. It trades about 0.07 of its total potential returns per unit of risk. Applied Materials is currently generating about 0.14 per unit of volatility. If you would invest  13,131  in Applied Materials on April 25, 2025 and sell it today you would earn a total of  2,889  from holding Applied Materials or generate 22.0% return on investment over 90 days.

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

Platinum Investment Management  vs.  Applied Materials

Platinum Investment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Platinum Investment Management are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Platinum Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Applied Materials

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Materials are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Applied Materials reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Platinum Investment and Applied Materials

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

The idea behind Platinum Investment Management and Applied Materials 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.