Correlation Between Centerra Gold and SPC Nickel

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

By analyzing existing cross correlation between Centerra Gold and SPC Nickel Corp, you can compare the effects of market volatilities on Centerra Gold and SPC Nickel 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 SPC Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centerra Gold and SPC Nickel.

Diversification Opportunities for Centerra Gold and SPC Nickel

0.68

Correlation Coefficient

Centerra Gold  SPC Nickel

Poor diversification

The 3 months correlation between Centerra and SPC is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Centerra Gold and SPC Nickel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPC Nickel Corp 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 SPC Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPC Nickel Corp has no effect on the direction of Centerra Gold i.e., Centerra Gold and SPC Nickel go up and down completely randomly.

Pair Corralation between Centerra Gold and SPC Nickel

Assuming the 90 days horizon Centerra Gold is expected to under-perform the SPC Nickel. But the stock apears to be less risky and, when comparing its historical volatility, Centerra Gold is 5.55 times less risky than SPC Nickel. The stock trades about -0.03 of its potential returns per unit of risk. The SPC Nickel Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2.50  in SPC Nickel Corp on October 12, 2024 and sell it today you would earn a total of  0.00  from holding SPC Nickel Corp or generate 0.0% return on investment over 90 days.

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

Centerra Gold  vs.  SPC Nickel Corp

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 latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

SPC Nickel Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPC Nickel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, SPC Nickel is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Centerra Gold and SPC Nickel

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

The idea behind Centerra Gold and SPC Nickel Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.