Correlation Between Regal Investment and Centaurus Metals

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

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

Diversification Opportunities for Regal Investment and Centaurus Metals

0.03

Correlation Coefficient

Regal Investment  Centaurus Metals

Significant diversification

The 3 months correlation between Regal and Centaurus is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Regal Investment and Centaurus Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaurus Metals and Regal Investment 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 Regal Investment 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 Regal Investment i.e., Regal Investment and Centaurus Metals go up and down completely randomly.

Pair Corralation between Regal Investment and Centaurus Metals

Assuming the 90 days trading horizon Regal Investment is expected to under-perform the Centaurus Metals. But the stock apears to be less risky and, when comparing its historical volatility, Regal Investment is 2.76 times less risky than Centaurus Metals. The stock trades about -0.13 of its potential returns per unit of risk. The Centaurus Metals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  35.00  in Centaurus Metals on December 28, 2024 and sell it today you would earn a total of  2.00  from holding Centaurus Metals or generate 5.71% return on investment over 90 days.

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

Regal Investment  vs.  Centaurus Metals

Regal Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Regal Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Centaurus Metals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Centaurus Metals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Centaurus Metals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Regal Investment and Centaurus Metals

The main advantage of trading using opposite Regal Investment and Centaurus Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regal Investment 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 Regal Investment and Centaurus 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.