Correlation Between Centaurus Metals and Ampol

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

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

Diversification Opportunities for Centaurus Metals and Ampol

0.48

Correlation Coefficient

Centaurus Metals  Ampol

Very weak diversification

The 3 months correlation between Centaurus and Ampol is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Centaurus Metals and Ampol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ampol and Centaurus Metals 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 Centaurus Metals are associated (or correlated) with Ampol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ampol has no effect on the direction of Centaurus Metals i.e., Centaurus Metals and Ampol go up and down completely randomly.

Pair Corralation between Centaurus Metals and Ampol

Assuming the 90 days trading horizon Centaurus Metals is expected to generate 2.98 times more return on investment than Ampol. However, Centaurus Metals is 2.98 times more volatile than Ampol. It trades about 0.01 of its potential returns per unit of risk. Ampol is currently generating about -0.03 per unit of risk. If you would invest  41.00  in Centaurus Metals on September 12, 2024 and sell it today you would lose (1.00) from holding Centaurus Metals or give up 2.44% of portfolio value over 90 days.

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

Centaurus Metals  vs.  Ampol

Centaurus Metals

Risk-Adjusted Performance

0 of 100

Insignificant

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

Ampol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ampol has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Ampol 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 Centaurus Metals and Ampol

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

The idea behind Centaurus Metals and Ampol 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..