Correlation Between ANT and Central Industries

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

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

Diversification Opportunities for ANT and Central Industries

0.15

Correlation Coefficient

ANT  Central Industries

Average diversification

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

Pair Corralation between ANT and Central Industries

Assuming the 90 days trading horizon ANT is expected to generate 8.35 times more return on investment than Central Industries. However, ANT is 8.35 times more volatile than Central Industries PLC. It trades about 0.08 of its potential returns per unit of risk. Central Industries PLC is currently generating about 0.0 per unit of risk. If you would invest  147.00  in ANT on December 22, 2024 and sell it today you would earn a total of  0.00  from holding ANT or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	87.69%
Values	Daily Returns

ANT  vs.  Central Industries PLC

ANT

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ANT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, ANT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Central Industries PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Central Industries PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Central Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ANT and Central Industries

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

The idea behind ANT and Central Industries PLC 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.