Correlation Between Central Asia and Future Metals
Can any of the company-specific risk be diversified away by investing in both Central Asia and Future 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 Central Asia and Future Metals 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 Future Metals NL, you can compare the effects of market volatilities on Central Asia and Future 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 Central Asia with a short position of Future Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Asia and Future Metals.
Diversification Opportunities for Central Asia and Future Metals
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Central and Future is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Central Asia Metals and Future Metals NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Future Metals NL 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 Future Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Future Metals NL has no effect on the direction of Central Asia i.e., Central Asia and Future Metals go up and down completely randomly.
Pair Corralation between Central Asia and Future Metals
Assuming the 90 days trading horizon Central Asia Metals is expected to generate 0.53 times more return on investment than Future Metals. However, Central Asia Metals is 1.89 times less risky than Future Metals. It trades about -0.07 of its potential returns per unit of risk. Future Metals NL is currently generating about -0.06 per unit of risk. If you would invest 20,012 in Central Asia Metals on September 3, 2024 and sell it today you would lose (3,572) from holding Central Asia Metals or give up 17.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Asia Metals vs. Future Metals NL
Performance |
| Timeline |
| Central Asia Metals |
| Future Metals NL |
Central Asia and Future Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Asia and Future Metals
The main advantage of trading using opposite Central Asia and Future Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Asia position performs unexpectedly, Future 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 Future Metals will offset losses from the drop in Future Metals' long position.| Central Asia vs. The Investment | Central Asia vs. Erste Group Bank | Central Asia vs. Alior Bank SA | Central Asia vs. Herald Investment Trust |
| Future Metals vs. Monster Beverage Corp | Future Metals vs. Hilton Food Group | Future Metals vs. Edita Food Industries | Future Metals vs. Sligro Food 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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