Correlation Between Central Asia and Zanaga Iron
Can any of the company-specific risk be diversified away by investing in both Central Asia and Zanaga Iron 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 Zanaga Iron 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 Zanaga Iron Ore, you can compare the effects of market volatilities on Central Asia and Zanaga Iron 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 Zanaga Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Asia and Zanaga Iron.
Diversification Opportunities for Central Asia and Zanaga Iron
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Central and Zanaga is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Central Asia Metals and Zanaga Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zanaga Iron Ore 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 Zanaga Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zanaga Iron Ore has no effect on the direction of Central Asia i.e., Central Asia and Zanaga Iron go up and down completely randomly.
Pair Corralation between Central Asia and Zanaga Iron
Assuming the 90 days trading horizon Central Asia Metals is expected to generate 0.33 times more return on investment than Zanaga Iron. However, Central Asia Metals is 3.08 times less risky than Zanaga Iron. It trades about -0.35 of its potential returns per unit of risk. Zanaga Iron Ore is currently generating about -0.19 per unit of risk. If you would invest 17,780 in Central Asia Metals on September 3, 2024 and sell it today you would lose (1,540) from holding Central Asia Metals or give up 8.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Asia Metals vs. Zanaga Iron Ore
Performance |
| Timeline |
| Central Asia Metals |
| Zanaga Iron Ore |
Central Asia and Zanaga Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Asia and Zanaga Iron
The main advantage of trading using opposite Central Asia and Zanaga Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Asia position performs unexpectedly, Zanaga Iron 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 Zanaga Iron will offset losses from the drop in Zanaga Iron's long position.The idea behind Central Asia Metals and Zanaga Iron Ore pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Zanaga Iron vs. Givaudan SA | Zanaga Iron vs. Atalaya Mining | Zanaga Iron vs. Central Asia Metals | Zanaga Iron vs. Metals Exploration Plc |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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