Correlation Between Central Asia and Blackrock World

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

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

Diversification Opportunities for Central Asia and Blackrock World

0.49

Correlation Coefficient

Central Asia  Blackrock World

Very weak diversification

The 3 months correlation between Central and Blackrock is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Central Asia Metals and Blackrock World Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock World Mining and Central Asia 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 Central Asia Metals are associated (or correlated) with Blackrock World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock World Mining has no effect on the direction of Central Asia i.e., Central Asia and Blackrock World go up and down completely randomly.

Pair Corralation between Central Asia and Blackrock World

Assuming the 90 days trading horizon Central Asia Metals is expected to under-perform the Blackrock World. In addition to that, Central Asia is 1.41 times more volatile than Blackrock World Mining. It trades about -0.05 of its total potential returns per unit of risk. Blackrock World Mining is currently generating about -0.07 per unit of volatility. If you would invest  50,500  in Blackrock World Mining on December 2, 2024 and sell it today you would lose (2,700) from holding Blackrock World Mining or give up 5.35% of portfolio value over 90 days.

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

Central Asia Metals  vs.  Blackrock World Mining

Central Asia Metals

Risk-Adjusted Performance

Very Weak

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

Blackrock World Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock World Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Blackrock World is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Central Asia and Blackrock World

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

The idea behind Central Asia Metals and Blackrock World Mining 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.