Correlation Between Alternative Investment and Centaurus Metals
Can any of the company-specific risk be diversified away by investing in both Alternative 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 Alternative 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 Alternative Investment Trust and Centaurus Metals, you can compare the effects of market volatilities on Alternative 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 Alternative Investment with a short position of Centaurus Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alternative Investment and Centaurus Metals.
Diversification Opportunities for Alternative Investment and Centaurus Metals
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alternative and Centaurus is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Alternative Investment Trust and Centaurus Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaurus Metals and Alternative 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 Alternative Investment Trust 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 Alternative Investment i.e., Alternative Investment and Centaurus Metals go up and down completely randomly.
Pair Corralation between Alternative Investment and Centaurus Metals
Assuming the 90 days trading horizon Alternative Investment is expected to generate 1.53 times less return on investment than Centaurus Metals. But when comparing it to its historical volatility, Alternative Investment Trust is 3.21 times less risky than Centaurus Metals. It trades about 0.16 of its potential returns per unit of risk. Centaurus Metals is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 38.00 in Centaurus Metals on August 28, 2024 and sell it today you would earn a total of 7.00 from holding Centaurus Metals or generate 18.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Alternative Investment Trust vs. Centaurus Metals
Performance |
| Timeline |
| Alternative Investment |
| Centaurus Metals |
Alternative Investment and Centaurus Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alternative Investment and Centaurus Metals
The main advantage of trading using opposite Alternative Investment and Centaurus Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alternative 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.| Alternative Investment vs. National Australia Bank | Alternative Investment vs. National Australia Bank | Alternative Investment vs. Westpac Banking | Alternative Investment vs. National Australia Bank |
| Centaurus Metals vs. Northern Star Resources | Centaurus Metals vs. Evolution Mining | Centaurus Metals vs. Bluescope Steel | Centaurus Metals vs. Sandfire Resources NL |
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.
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