Correlation Between Centaurus Metals and Stelar Metals

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

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

Diversification Opportunities for Centaurus Metals and Stelar Metals

0.58

Correlation Coefficient

Centaurus Metals  Stelar Metals

Very weak diversification

The 3 months correlation between Centaurus and Stelar is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Centaurus Metals and Stelar Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stelar Metals 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 Stelar Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stelar Metals has no effect on the direction of Centaurus Metals i.e., Centaurus Metals and Stelar Metals go up and down completely randomly.

Pair Corralation between Centaurus Metals and Stelar Metals

Assuming the 90 days trading horizon Centaurus Metals is expected to under-perform the Stelar Metals. But the stock apears to be less risky and, when comparing its historical volatility, Centaurus Metals is 1.24 times less risky than Stelar Metals. The stock trades about -0.03 of its potential returns per unit of risk. The Stelar Metals is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Stelar Metals on September 15, 2024 and sell it today you would lose (7.90) from holding Stelar Metals or give up 52.67% 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.  Stelar Metals

Centaurus Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Centaurus Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Stelar Metals

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Centaurus Metals and Stelar Metals 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.