Correlation Between Centaurus Metals and Sports Entertainment

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

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

Diversification Opportunities for Centaurus Metals and Sports Entertainment

0.73

Correlation Coefficient

Centaurus Metals  Sports Entertainment

Poor diversification

The 3 months correlation between Centaurus and Sports is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Centaurus Metals and Sports Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sports Entertainment 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 Sports Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sports Entertainment has no effect on the direction of Centaurus Metals i.e., Centaurus Metals and Sports Entertainment go up and down completely randomly.

Pair Corralation between Centaurus Metals and Sports Entertainment

Assuming the 90 days trading horizon Centaurus Metals is expected to under-perform the Sports Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Centaurus Metals is 1.11 times less risky than Sports Entertainment. The stock trades about -0.12 of its potential returns per unit of risk. The Sports Entertainment Group is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Sports Entertainment Group on October 4, 2024 and sell it today you would lose (6.00) from holding Sports Entertainment Group or give up 23.08% of portfolio value over 90 days.

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

Centaurus Metals  vs.  Sports Entertainment Group

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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Sports Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sports Entertainment Group 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 technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Centaurus Metals and Sports Entertainment

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

The idea behind Centaurus Metals and Sports Entertainment 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.