Correlation Between Centor Energy and Talga Group

Can any of the company-specific risk be diversified away by investing in both Centor Energy and Talga Group 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 Centor Energy and Talga Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Centor Energy and Talga Group

0.13

Correlation Coefficient

Centor Energy  Talga Group

Average diversification

The 3 months correlation between Centor and Talga is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Centor Energy and Talga Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talga Group and Centor Energy 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 Centor Energy are associated (or correlated) with Talga Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talga Group has no effect on the direction of Centor Energy i.e., Centor Energy and Talga Group go up and down completely randomly.

Pair Corralation between Centor Energy and Talga Group

If you would invest  27.00  in Talga Group on October 27, 2024 and sell it today you would earn a total of  6.00  from holding Talga Group or generate 22.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Centor Energy  vs.  Talga Group

Centor Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Talga Group

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Talga Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Talga Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Centor Energy and Talga Group

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

The idea behind Centor Energy and Talga Group 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..