Correlation Between Central Asia and Antofagasta PLC
Can any of the company-specific risk be diversified away by investing in both Central Asia and Antofagasta PLC 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 Central Asia and Antofagasta PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Asia Metals and Antofagasta PLC, you can compare the effects of market volatilities on Central Asia and Antofagasta PLC 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 Central Asia with a short position of Antofagasta PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Asia and Antofagasta PLC.
Diversification Opportunities for Central Asia and Antofagasta PLC
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Central and Antofagasta is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Central Asia Metals and Antofagasta PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antofagasta PLC and Central Asia 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 Central Asia Metals are associated (or correlated) with Antofagasta PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antofagasta PLC has no effect on the direction of Central Asia i.e., Central Asia and Antofagasta PLC go up and down completely randomly.
Pair Corralation between Central Asia and Antofagasta PLC
Assuming the 90 days trading horizon Central Asia Metals is expected to under-perform the Antofagasta PLC. But the stock apears to be less risky and, when comparing its historical volatility, Central Asia Metals is 2.08 times less risky than Antofagasta PLC. The stock trades about -0.45 of its potential returns per unit of risk. The Antofagasta PLC is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 180,700 in Antofagasta PLC on August 28, 2024 and sell it today you would lose (13,550) from holding Antofagasta PLC or give up 7.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Asia Metals vs. Antofagasta PLC
Performance |
| Timeline |
| Central Asia Metals |
| Antofagasta PLC |
Central Asia and Antofagasta PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Asia and Antofagasta PLC
The main advantage of trading using opposite Central Asia and Antofagasta PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Asia position performs unexpectedly, Antofagasta PLC 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 Antofagasta PLC will offset losses from the drop in Antofagasta PLC's long position.| Central Asia vs. Givaudan SA | Central Asia vs. Antofagasta PLC | Central Asia vs. Atalaya Mining | Central Asia vs. Amaroq Minerals |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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