Correlation Between Caledonia MiningPlc and Segro Plc

Can any of the company-specific risk be diversified away by investing in both Caledonia MiningPlc and Segro Plc 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 Caledonia MiningPlc and Segro Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Caledonia Mining and Segro Plc, you can compare the effects of market volatilities on Caledonia MiningPlc and Segro Plc 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 Caledonia MiningPlc with a short position of Segro Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia MiningPlc and Segro Plc.

Diversification Opportunities for Caledonia MiningPlc and Segro Plc

0.14

Correlation Coefficient

Caledonia MiningPlc  Segro Plc

Average diversification

The 3 months correlation between Caledonia and Segro is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining and Segro Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Segro Plc and Caledonia MiningPlc 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 Caledonia Mining are associated (or correlated) with Segro Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Segro Plc has no effect on the direction of Caledonia MiningPlc i.e., Caledonia MiningPlc and Segro Plc go up and down completely randomly.

Pair Corralation between Caledonia MiningPlc and Segro Plc

Assuming the 90 days trading horizon Caledonia Mining is expected to generate 1.18 times more return on investment than Segro Plc. However, Caledonia MiningPlc is 1.18 times more volatile than Segro Plc. It trades about 0.2 of its potential returns per unit of risk. Segro Plc is currently generating about 0.06 per unit of risk. If you would invest  77,500  in Caledonia Mining on December 29, 2024 and sell it today you would earn a total of  15,000  from holding Caledonia Mining or generate 19.35% return on investment over 90 days.

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

Caledonia Mining  vs.  Segro Plc

Caledonia MiningPlc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Caledonia Mining are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Caledonia MiningPlc unveiled solid returns over the last few months and may actually be approaching a breakup point.

Segro Plc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Segro Plc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Segro Plc is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Caledonia MiningPlc and Segro Plc

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

The idea behind Caledonia Mining and Segro Plc 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.