Correlation Between Astar and Capricorn Metals
Can any of the company-specific risk be diversified away by investing in both Astar and Capricorn 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 Astar and Capricorn Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and Capricorn Metals, you can compare the effects of market volatilities on Astar and Capricorn 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 Astar with a short position of Capricorn Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Capricorn Metals.
Diversification Opportunities for Astar and Capricorn Metals
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Astar and Capricorn is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Capricorn Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capricorn Metals and Astar 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 Astar are associated (or correlated) with Capricorn Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capricorn Metals has no effect on the direction of Astar i.e., Astar and Capricorn Metals go up and down completely randomly.
Pair Corralation between Astar and Capricorn Metals
Assuming the 90 days trading horizon Astar is expected to under-perform the Capricorn Metals. In addition to that, Astar is 2.12 times more volatile than Capricorn Metals. It trades about 0.0 of its total potential returns per unit of risk. Capricorn Metals is currently generating about 0.13 per unit of volatility. If you would invest 578.00 in Capricorn Metals on November 2, 2024 and sell it today you would earn a total of 185.00 from holding Capricorn Metals or generate 32.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.2% |
| Values | Daily Returns |
Astar vs. Capricorn Metals
Performance |
| Timeline |
| Astar |
| Capricorn Metals |
Astar and Capricorn Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and Capricorn Metals
The main advantage of trading using opposite Astar and Capricorn Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, Capricorn 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 Capricorn Metals will offset losses from the drop in Capricorn Metals' long position.The idea behind Astar and Capricorn 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.| Capricorn Metals vs. Perseus Mining | Capricorn Metals vs. Hutchison Telecommunications | Capricorn Metals vs. Viva Leisure | Capricorn Metals vs. MetalsGrove Mining |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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