Correlation Between Central Asia and DS Smith
Can any of the company-specific risk be diversified away by investing in both Central Asia and DS Smith 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 DS Smith 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 DS Smith PLC, you can compare the effects of market volatilities on Central Asia and DS Smith 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 DS Smith. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Asia and DS Smith.
Diversification Opportunities for Central Asia and DS Smith
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Central and SMDS is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Central Asia Metals and DS Smith PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DS Smith 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 DS Smith. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DS Smith PLC has no effect on the direction of Central Asia i.e., Central Asia and DS Smith go up and down completely randomly.
Pair Corralation between Central Asia and DS Smith
Assuming the 90 days trading horizon Central Asia Metals is expected to under-perform the DS Smith. In addition to that, Central Asia is 1.34 times more volatile than DS Smith PLC. It trades about -0.18 of its total potential returns per unit of risk. DS Smith PLC is currently generating about 0.26 per unit of volatility. If you would invest 54,400 in DS Smith PLC on November 5, 2024 and sell it today you would earn a total of 3,850 from holding DS Smith PLC or generate 7.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Asia Metals vs. DS Smith PLC
Performance |
| Timeline |
| Central Asia Metals |
| DS Smith PLC |
Central Asia and DS Smith Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Asia and DS Smith
The main advantage of trading using opposite Central Asia and DS Smith positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Asia position performs unexpectedly, DS Smith 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 DS Smith will offset losses from the drop in DS Smith's long position.| Central Asia vs. Silver Bullet Data | Central Asia vs. Atalaya Mining | Central Asia vs. Fortuna Silver Mines | Central Asia vs. Heavitree Brewery |
| DS Smith vs. Lowland Investment Co | DS Smith vs. Seraphim Space Investment | DS Smith vs. BlackRock Frontiers Investment | DS Smith vs. JPMorgan Japanese Investment |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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