Correlation Between Centaurus Metals and Brainchip Holdings

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

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

Diversification Opportunities for Centaurus Metals and Brainchip Holdings

-0.03

Correlation Coefficient

Centaurus Metals  Brainchip Holdings

Good diversification

The 3 months correlation between Centaurus and Brainchip is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Centaurus Metals and Brainchip Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brainchip Holdings 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 Brainchip Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brainchip Holdings has no effect on the direction of Centaurus Metals i.e., Centaurus Metals and Brainchip Holdings go up and down completely randomly.

Pair Corralation between Centaurus Metals and Brainchip Holdings

Assuming the 90 days trading horizon Centaurus Metals is expected to under-perform the Brainchip Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Centaurus Metals is 1.14 times less risky than Brainchip Holdings. The stock trades about 0.0 of its potential returns per unit of risk. The Brainchip Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Brainchip Holdings on September 27, 2024 and sell it today you would earn a total of  11.00  from holding Brainchip Holdings or generate 52.38% 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.  Brainchip Holdings

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.

Brainchip Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brainchip Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Brainchip Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Centaurus Metals and Brainchip Holdings

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

The idea behind Centaurus Metals and Brainchip Holdings 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.