Correlation Between Bell Financial and Centaurus Metals

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

By analyzing existing cross correlation between Bell Financial Group and Centaurus Metals, you can compare the effects of market volatilities on Bell Financial and Centaurus Metals 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 Bell Financial with a short position of Centaurus Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bell Financial and Centaurus Metals.

Diversification Opportunities for Bell Financial and Centaurus Metals

0.15

Correlation Coefficient

Bell Financial  Centaurus Metals

Average diversification

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

Pair Corralation between Bell Financial and Centaurus Metals

Assuming the 90 days trading horizon Bell Financial Group is expected to under-perform the Centaurus Metals. But the stock apears to be less risky and, when comparing its historical volatility, Bell Financial Group is 3.78 times less risky than Centaurus Metals. The stock trades about -0.05 of its potential returns per unit of risk. The Centaurus Metals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  33.00  in Centaurus Metals on December 23, 2024 and sell it today you would earn a total of  4.00  from holding Centaurus Metals or generate 12.12% return on investment over 90 days.

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

Bell Financial Group  vs.  Centaurus Metals

Bell Financial Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bell Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Bell Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Centaurus Metals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Centaurus Metals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Centaurus Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bell Financial and Centaurus Metals

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

The idea behind Bell Financial Group and Centaurus Metals 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.