Correlation Between Central Asia and Hardide PLC
Can any of the company-specific risk be diversified away by investing in both Central Asia and Hardide 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 Hardide 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 Hardide PLC, you can compare the effects of market volatilities on Central Asia and Hardide 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 Hardide PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Asia and Hardide PLC.
Diversification Opportunities for Central Asia and Hardide PLC
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Central and Hardide is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Central Asia Metals and Hardide PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hardide 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 Hardide PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hardide PLC has no effect on the direction of Central Asia i.e., Central Asia and Hardide PLC go up and down completely randomly.
Pair Corralation between Central Asia and Hardide PLC
Assuming the 90 days trading horizon Central Asia Metals is expected to generate 0.92 times more return on investment than Hardide PLC. However, Central Asia Metals is 1.08 times less risky than Hardide PLC. It trades about -0.1 of its potential returns per unit of risk. Hardide PLC is currently generating about -0.15 per unit of risk. If you would invest 20,967 in Central Asia Metals on September 1, 2024 and sell it today you would lose (4,727) from holding Central Asia Metals or give up 22.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.23% |
| Values | Daily Returns |
Central Asia Metals vs. Hardide PLC
Performance |
| Timeline |
| Central Asia Metals |
| Hardide PLC |
Central Asia and Hardide PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Asia and Hardide PLC
The main advantage of trading using opposite Central Asia and Hardide PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Asia position performs unexpectedly, Hardide 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 Hardide PLC will offset losses from the drop in Hardide PLC's long position.| Central Asia vs. Bisichi Mining PLC | Central Asia vs. McEwen Mining | Central Asia vs. Coeur Mining | Central Asia vs. GoldMining |
| Hardide PLC vs. Cincinnati Financial Corp | Hardide PLC vs. Zurich Insurance Group | Hardide PLC vs. Ameriprise Financial | Hardide PLC vs. InterContinental Hotels 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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