Correlation Between Centaurus Metals and Lottery

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

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

Diversification Opportunities for Centaurus Metals and Lottery

0.05

Correlation Coefficient

Centaurus Metals  Lottery

Significant diversification

The 3 months correlation between Centaurus and Lottery is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Centaurus Metals and Lottery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lottery 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 Lottery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lottery has no effect on the direction of Centaurus Metals i.e., Centaurus Metals and Lottery go up and down completely randomly.

Pair Corralation between Centaurus Metals and Lottery

Assuming the 90 days trading horizon Centaurus Metals is expected to under-perform the Lottery. In addition to that, Centaurus Metals is 4.28 times more volatile than Lottery. It trades about -0.07 of its total potential returns per unit of risk. Lottery is currently generating about -0.07 per unit of volatility. If you would invest  503.00  in Lottery on October 23, 2024 and sell it today you would lose (21.00) from holding Lottery or give up 4.17% of portfolio value over 90 days.

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

Centaurus Metals  vs.  Lottery

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.

Lottery

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Centaurus Metals and Lottery 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 Global Correlations module to find global opportunities by holding instruments from different markets.