Correlation Between Centerra Gold and D Box

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

By analyzing existing cross correlation between Centerra Gold and D Box Technologies, you can compare the effects of market volatilities on Centerra Gold and D Box 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 Centerra Gold with a short position of D Box. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centerra Gold and D Box.

Diversification Opportunities for Centerra Gold and D Box

-0.65

Correlation Coefficient

Centerra Gold  D Box

Excellent diversification

The 3 months correlation between Centerra and DBO is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Centerra Gold and D Box Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on D Box Technologies and Centerra Gold 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 Centerra Gold are associated (or correlated) with D Box. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of D Box Technologies has no effect on the direction of Centerra Gold i.e., Centerra Gold and D Box go up and down completely randomly.

Pair Corralation between Centerra Gold and D Box

Assuming the 90 days horizon Centerra Gold is expected to generate 2.74 times less return on investment than D Box. But when comparing it to its historical volatility, Centerra Gold is 2.34 times less risky than D Box. It trades about 0.04 of its potential returns per unit of risk. D Box Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9.00  in D Box Technologies on October 5, 2024 and sell it today you would earn a total of  6.00  from holding D Box Technologies or generate 66.67% return on investment over 90 days.

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

Centerra Gold  vs.  D Box Technologies

Centerra Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centerra Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Centerra Gold is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

D Box Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in D Box Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, D Box displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Centerra Gold and D Box

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

The idea behind Centerra Gold and D Box Technologies 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.