Correlation Between Rightmove PLC and Centaur Media

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

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

Diversification Opportunities for Rightmove PLC and Centaur Media

-0.36

Correlation Coefficient

Rightmove PLC  Centaur Media

Very good diversification

The 3 months correlation between Rightmove and Centaur is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Rightmove PLC and Centaur Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaur Media and Rightmove PLC 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 Rightmove PLC are associated (or correlated) with Centaur Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaur Media has no effect on the direction of Rightmove PLC i.e., Rightmove PLC and Centaur Media go up and down completely randomly.

Pair Corralation between Rightmove PLC and Centaur Media

Assuming the 90 days trading horizon Rightmove PLC is expected to generate 0.93 times more return on investment than Centaur Media. However, Rightmove PLC is 1.08 times less risky than Centaur Media. It trades about 0.16 of its potential returns per unit of risk. Centaur Media is currently generating about -0.11 per unit of risk. If you would invest  59,980  in Rightmove PLC on October 6, 2024 and sell it today you would earn a total of  4,820  from holding Rightmove PLC or generate 8.04% return on investment over 90 days.

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

Rightmove PLC  vs.  Centaur Media

Rightmove PLC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rightmove PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Rightmove PLC is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Centaur Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centaur Media 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Rightmove PLC and Centaur Media

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

The idea behind Rightmove PLC and Centaur Media 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.