Correlation Between Arras Minerals and Impala Platinum

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

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

Diversification Opportunities for Arras Minerals and Impala Platinum

0.45

Correlation Coefficient

Arras Minerals  Impala Platinum

Very weak diversification

The 3 months correlation between Arras and Impala is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Arras Minerals Corp and Impala Platinum Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impala Platinum Holdings and Arras Minerals 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 Arras Minerals Corp are associated (or correlated) with Impala Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impala Platinum Holdings has no effect on the direction of Arras Minerals i.e., Arras Minerals and Impala Platinum go up and down completely randomly.

Pair Corralation between Arras Minerals and Impala Platinum

Assuming the 90 days horizon Arras Minerals is expected to generate 1.4 times less return on investment than Impala Platinum. In addition to that, Arras Minerals is 1.61 times more volatile than Impala Platinum Holdings. It trades about 0.09 of its total potential returns per unit of risk. Impala Platinum Holdings is currently generating about 0.2 per unit of volatility. If you would invest  359.00  in Impala Platinum Holdings on February 16, 2024 and sell it today you would earn a total of  212.00  from holding Impala Platinum Holdings or generate 59.05% return on investment over 90 days.

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

Arras Minerals Corp  vs.  Impala Platinum Holdings

Arras Minerals Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Arras Minerals Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, Arras Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Impala Platinum Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Impala Platinum Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Impala Platinum reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arras Minerals and Impala Platinum

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

The idea behind Arras Minerals Corp and Impala Platinum Holdings 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.