Correlation Between Centaur Bci and Coronation Industrial

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

By analyzing existing cross correlation between Centaur Bci Balanced and Coronation Industrial, you can compare the effects of market volatilities on Centaur Bci and Coronation Industrial 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 Centaur Bci with a short position of Coronation Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centaur Bci and Coronation Industrial.

Diversification Opportunities for Centaur Bci and Coronation Industrial

0.84

Correlation Coefficient

Centaur Bci  Coronation Industrial

Very poor diversification

The 3 months correlation between Centaur and Coronation is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Centaur Bci Balanced and Coronation Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coronation Industrial and Centaur Bci 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 Centaur Bci Balanced are associated (or correlated) with Coronation Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coronation Industrial has no effect on the direction of Centaur Bci i.e., Centaur Bci and Coronation Industrial go up and down completely randomly.

Pair Corralation between Centaur Bci and Coronation Industrial

Assuming the 90 days trading horizon Centaur Bci Balanced is expected to generate 0.73 times more return on investment than Coronation Industrial. However, Centaur Bci Balanced is 1.38 times less risky than Coronation Industrial. It trades about -0.04 of its potential returns per unit of risk. Coronation Industrial is currently generating about -0.06 per unit of risk. If you would invest  238.00  in Centaur Bci Balanced on October 20, 2024 and sell it today you would lose (4.00) from holding Centaur Bci Balanced or give up 1.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Centaur Bci Balanced  vs.  Coronation Industrial

Centaur Bci Balanced

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centaur Bci Balanced has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Centaur Bci is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Coronation Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coronation Industrial has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong basic indicators, Coronation Industrial is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Centaur Bci and Coronation Industrial

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

The idea behind Centaur Bci Balanced and Coronation Industrial 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.