Correlation Between Brainchip Holdings and Centaurus Metals

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

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

Diversification Opportunities for Brainchip Holdings and Centaurus Metals

-0.03

Correlation Coefficient

Brainchip Holdings  Centaurus Metals

Good diversification

The 3 months correlation between Brainchip and Centaurus is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Brainchip Holdings and Centaurus Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaurus Metals and Brainchip Holdings 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 Brainchip Holdings 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 Brainchip Holdings i.e., Brainchip Holdings and Centaurus Metals go up and down completely randomly.

Pair Corralation between Brainchip Holdings and Centaurus Metals

Assuming the 90 days trading horizon Brainchip Holdings is expected to generate 1.69 times more return on investment than Centaurus Metals. However, Brainchip Holdings is 1.69 times more volatile than Centaurus Metals. It trades about 0.22 of its potential returns per unit of risk. Centaurus Metals is currently generating about -0.23 per unit of risk. If you would invest  24.00  in Brainchip Holdings on September 27, 2024 and sell it today you would earn a total of  8.00  from holding Brainchip Holdings or generate 33.33% return on investment over 90 days.

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

Brainchip Holdings  vs.  Centaurus Metals

Brainchip Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brainchip Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Brainchip Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Centaurus Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centaurus Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Brainchip Holdings and Centaurus Metals

The main advantage of trading using opposite Brainchip Holdings and Centaurus Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brainchip Holdings 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 Brainchip Holdings 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.