Correlation Between ALS and Centaurus Metals
Can any of the company-specific risk be diversified away by investing in both ALS 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 ALS and Centaurus Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALS and Centaurus Metals, you can compare the effects of market volatilities on ALS 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 ALS with a short position of Centaurus Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALS and Centaurus Metals.
Diversification Opportunities for ALS and Centaurus Metals
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ALS and Centaurus is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding ALS and Centaurus Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaurus Metals and ALS 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 ALS 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 ALS i.e., ALS and Centaurus Metals go up and down completely randomly.
Pair Corralation between ALS and Centaurus Metals
Assuming the 90 days trading horizon ALS is expected to generate 0.3 times more return on investment than Centaurus Metals. However, ALS is 3.36 times less risky than Centaurus Metals. It trades about 0.07 of its potential returns per unit of risk. Centaurus Metals is currently generating about 0.01 per unit of risk. If you would invest 1,404 in ALS on September 3, 2024 and sell it today you would earn a total of 180.00 from holding ALS or generate 12.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALS vs. Centaurus Metals
Performance |
| Timeline |
| ALS |
| Centaurus Metals |
ALS and Centaurus Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALS and Centaurus Metals
The main advantage of trading using opposite ALS and Centaurus Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALS 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.| ALS vs. Microequities Asset Management | ALS vs. Regal Funds Management | ALS vs. K2 Asset Management | ALS vs. My Foodie Box |
| Centaurus Metals vs. Northern Star Resources | Centaurus Metals vs. Evolution Mining | Centaurus Metals vs. Bluescope Steel | Centaurus Metals vs. Aneka Tambang Tbk |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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