Correlation Between Regal Funds and Centaurus Metals

Can any of the company-specific risk be diversified away by investing in both Regal Funds 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 Funds 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 Funds Management and Centaurus Metals, you can compare the effects of market volatilities on Regal Funds 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 Funds with a short position of Centaurus Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regal Funds and Centaurus Metals.

Diversification Opportunities for Regal Funds and Centaurus Metals

0.29

Correlation Coefficient

Regal Funds  Centaurus Metals

Modest diversification

The 3 months correlation between Regal and Centaurus is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Regal Funds Management and Centaurus Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaurus Metals and Regal Funds 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 Funds Management 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 Funds i.e., Regal Funds and Centaurus Metals go up and down completely randomly.

Pair Corralation between Regal Funds and Centaurus Metals

Assuming the 90 days trading horizon Regal Funds Management is expected to generate 0.45 times more return on investment than Centaurus Metals. However, Regal Funds Management is 2.24 times less risky than Centaurus Metals. It trades about 0.17 of its potential returns per unit of risk. Centaurus Metals is currently generating about 0.05 per unit of risk. If you would invest  321.00  in Regal Funds Management on September 5, 2024 and sell it today you would earn a total of  76.00  from holding Regal Funds Management or generate 23.68% return on investment over 90 days.

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

Regal Funds Management  vs.  Centaurus Metals

Regal Funds Management

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Regal Funds Management are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Regal Funds unveiled solid returns over the last few months and may actually be approaching a breakup point.

Centaurus Metals

Risk-Adjusted Performance

3 of 100

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 unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Regal Funds and Centaurus Metals

The main advantage of trading using opposite Regal Funds and Centaurus Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regal Funds 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 Funds Management 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.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.