Correlation Between Centaurus Metals and Australia

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

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

Diversification Opportunities for Centaurus Metals and Australia

-0.26

Correlation Coefficient

Centaurus Metals  Australia

Very good diversification

The 3 months correlation between Centaurus and Australia is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Centaurus Metals and Australia and New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australia and New 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 Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australia and New has no effect on the direction of Centaurus Metals i.e., Centaurus Metals and Australia go up and down completely randomly.

Pair Corralation between Centaurus Metals and Australia

Assuming the 90 days trading horizon Centaurus Metals is expected to under-perform the Australia. In addition to that, Centaurus Metals is 4.99 times more volatile than Australia and New. It trades about 0.0 of its total potential returns per unit of risk. Australia and New is currently generating about 0.08 per unit of volatility. If you would invest  2,444  in Australia and New on September 20, 2024 and sell it today you would earn a total of  492.00  from holding Australia and New or generate 20.13% return on investment over 90 days.

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

Centaurus Metals  vs.  Australia and New

Centaurus Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centaurus Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Australia and New

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Centaurus Metals and Australia and New 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.