Correlation Between Fireweed Zinc and Centaurus Metals

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

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

Diversification Opportunities for Fireweed Zinc and Centaurus Metals

-0.27

Correlation Coefficient

Fireweed Zinc  Centaurus Metals

Very good diversification

The 3 months correlation between Fireweed and Centaurus is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Fireweed Zinc and Centaurus Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaurus Metals and Fireweed Zinc 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 Fireweed Zinc are associated (or correlated) with Centaurus Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaurus Metals has no effect on the direction of Fireweed Zinc i.e., Fireweed Zinc and Centaurus Metals go up and down completely randomly.

Pair Corralation between Fireweed Zinc and Centaurus Metals

Assuming the 90 days horizon Fireweed Zinc is expected to generate 0.63 times more return on investment than Centaurus Metals. However, Fireweed Zinc is 1.6 times less risky than Centaurus Metals. It trades about 0.06 of its potential returns per unit of risk. Centaurus Metals Limited is currently generating about -0.04 per unit of risk. If you would invest  99.00  in Fireweed Zinc on December 2, 2024 and sell it today you would earn a total of  9.00  from holding Fireweed Zinc or generate 9.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Fireweed Zinc  vs.  Centaurus Metals Limited

Fireweed Zinc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fireweed Zinc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Fireweed Zinc may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Centaurus Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Centaurus Metals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Fireweed Zinc and Centaurus Metals

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

The idea behind Fireweed Zinc and Centaurus Metals Limited 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.