Correlation Between Argo Investments and Centaurus Metals
Can any of the company-specific risk be diversified away by investing in both Argo Investments 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 Argo Investments and Centaurus Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Argo Investments and Centaurus Metals, you can compare the effects of market volatilities on Argo Investments 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 Argo Investments with a short position of Centaurus Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argo Investments and Centaurus Metals.
Diversification Opportunities for Argo Investments and Centaurus Metals
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Argo and Centaurus is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Argo Investments and Centaurus Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaurus Metals and Argo Investments 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 Argo Investments 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 Argo Investments i.e., Argo Investments and Centaurus Metals go up and down completely randomly.
Pair Corralation between Argo Investments and Centaurus Metals
Assuming the 90 days trading horizon Argo Investments is expected to generate 0.13 times more return on investment than Centaurus Metals. However, Argo Investments is 7.84 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 -0.08 per unit of risk. If you would invest 886.00 in Argo Investments on August 28, 2024 and sell it today you would earn a total of 17.00 from holding Argo Investments or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Argo Investments vs. Centaurus Metals
Performance |
| Timeline |
| Argo Investments |
| Centaurus Metals |
Argo Investments and Centaurus Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Argo Investments and Centaurus Metals
The main advantage of trading using opposite Argo Investments and Centaurus Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argo Investments 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.| Argo Investments vs. Land Homes Group | Argo Investments vs. Retail Food Group | Argo Investments vs. REGAL ASIAN INVESTMENTS | Argo Investments vs. Lendlease Group |
| 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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