Correlation Between Central Asia and Metals Exploration
Can any of the company-specific risk be diversified away by investing in both Central Asia and Metals Exploration 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 Metals Exploration 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 Metals Exploration Plc, you can compare the effects of market volatilities on Central Asia and Metals Exploration 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 Metals Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Asia and Metals Exploration.
Diversification Opportunities for Central Asia and Metals Exploration
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Central and Metals is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Central Asia Metals and Metals Exploration Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals Exploration 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 Metals Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals Exploration Plc has no effect on the direction of Central Asia i.e., Central Asia and Metals Exploration go up and down completely randomly.
Pair Corralation between Central Asia and Metals Exploration
Assuming the 90 days trading horizon Central Asia is expected to generate 115.53 times less return on investment than Metals Exploration. But when comparing it to its historical volatility, Central Asia Metals is 2.05 times less risky than Metals Exploration. It trades about 0.0 of its potential returns per unit of risk. Metals Exploration Plc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 160.00 in Metals Exploration Plc on August 27, 2024 and sell it today you would earn a total of 415.00 from holding Metals Exploration Plc or generate 259.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Asia Metals vs. Metals Exploration Plc
Performance |
| Timeline |
| Central Asia Metals |
| Metals Exploration Plc |
Central Asia and Metals Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Asia and Metals Exploration
The main advantage of trading using opposite Central Asia and Metals Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Asia position performs unexpectedly, Metals Exploration 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 Metals Exploration will offset losses from the drop in Metals Exploration's long position.| Central Asia vs. Givaudan SA | Central Asia vs. Antofagasta PLC | Central Asia vs. Atalaya Mining | Central Asia vs. Amaroq Minerals |
| Metals Exploration vs. Givaudan SA | Metals Exploration vs. Antofagasta PLC | Metals Exploration vs. Centamin PLC | Metals Exploration vs. Atalaya 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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