Correlation Between Centrex Metals and New Zealand

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

By analyzing existing cross correlation between Centrex Metals and New Zealand Oil, you can compare the effects of market volatilities on Centrex Metals and New Zealand 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 Centrex Metals with a short position of New Zealand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrex Metals and New Zealand.

Diversification Opportunities for Centrex Metals and New Zealand

0.0

Correlation Coefficient

Centrex Metals  New Zealand

Pay attention - limited upside

The 3 months correlation between Centrex and New is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Centrex Metals and New Zealand Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Zealand Oil and Centrex 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 Centrex Metals are associated (or correlated) with New Zealand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Zealand Oil has no effect on the direction of Centrex Metals i.e., Centrex Metals and New Zealand go up and down completely randomly.

Pair Corralation between Centrex Metals and New Zealand

If you would invest  1.70  in Centrex Metals on December 19, 2024 and sell it today you would earn a total of  0.00  from holding Centrex Metals or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Centrex Metals  vs.  New Zealand Oil

Centrex Metals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Centrex Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, Centrex Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

New Zealand Oil

Risk-Adjusted Performance

Very Weak

Over the last 90 days New Zealand Oil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, New Zealand is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Centrex Metals and New Zealand

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

The idea behind Centrex Metals and New Zealand Oil 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.