Correlation Between Autosports and Centrex Metals
Can any of the company-specific risk be diversified away by investing in both Autosports and Centrex 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 Autosports and Centrex Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autosports Group and Centrex Metals, you can compare the effects of market volatilities on Autosports and Centrex 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 Autosports with a short position of Centrex Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autosports and Centrex Metals.
Diversification Opportunities for Autosports and Centrex Metals
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Autosports and Centrex is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Autosports Group and Centrex Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrex Metals and Autosports 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 Autosports Group are associated (or correlated) with Centrex Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrex Metals has no effect on the direction of Autosports i.e., Autosports and Centrex Metals go up and down completely randomly.
Pair Corralation between Autosports and Centrex Metals
Assuming the 90 days trading horizon Autosports Group is expected to generate 0.38 times more return on investment than Centrex Metals. However, Autosports Group is 2.62 times less risky than Centrex Metals. It trades about 0.01 of its potential returns per unit of risk. Centrex Metals is currently generating about -0.07 per unit of risk. If you would invest 183.00 in Autosports Group on December 12, 2024 and sell it today you would lose (7.00) from holding Autosports Group or give up 3.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autosports Group vs. Centrex Metals
Performance |
| Timeline |
| Autosports Group |
| Centrex Metals |
Autosports and Centrex Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autosports and Centrex Metals
The main advantage of trading using opposite Autosports and Centrex Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autosports position performs unexpectedly, Centrex 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 Centrex Metals will offset losses from the drop in Centrex Metals' long position.| Autosports vs. Super Retail Group | ||
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| Centrex Metals vs. BSP Financial Group |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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