Correlation Between COAST ENTERTAINMENT and Leeuwin Metals

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Can any of the company-specific risk be diversified away by investing in both COAST ENTERTAINMENT and Leeuwin 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 COAST ENTERTAINMENT and Leeuwin Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COAST ENTERTAINMENT HOLDINGS and Leeuwin Metals, you can compare the effects of market volatilities on COAST ENTERTAINMENT and Leeuwin 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 COAST ENTERTAINMENT with a short position of Leeuwin Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of COAST ENTERTAINMENT and Leeuwin Metals.

Diversification Opportunities for COAST ENTERTAINMENT and Leeuwin Metals

0.2
  Correlation Coefficient

Modest diversification

The 3 months correlation between COAST and Leeuwin is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding COAST ENTERTAINMENT HOLDINGS and Leeuwin Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leeuwin Metals and COAST ENTERTAINMENT 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 COAST ENTERTAINMENT HOLDINGS are associated (or correlated) with Leeuwin Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leeuwin Metals has no effect on the direction of COAST ENTERTAINMENT i.e., COAST ENTERTAINMENT and Leeuwin Metals go up and down completely randomly.

Pair Corralation between COAST ENTERTAINMENT and Leeuwin Metals

Assuming the 90 days trading horizon COAST ENTERTAINMENT HOLDINGS is expected to under-perform the Leeuwin Metals. But the stock apears to be less risky and, when comparing its historical volatility, COAST ENTERTAINMENT HOLDINGS is 1.73 times less risky than Leeuwin Metals. The stock trades about -0.01 of its potential returns per unit of risk. The Leeuwin Metals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  8.10  in Leeuwin Metals on August 27, 2024 and sell it today you would lose (0.80) from holding Leeuwin Metals or give up 9.88% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

COAST ENTERTAINMENT HOLDINGS  vs.  Leeuwin Metals

 Performance 
       Timeline  
COAST ENTERTAINMENT 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days COAST ENTERTAINMENT HOLDINGS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
Leeuwin Metals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Leeuwin Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

COAST ENTERTAINMENT and Leeuwin Metals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with COAST ENTERTAINMENT and Leeuwin Metals

The main advantage of trading using opposite COAST ENTERTAINMENT and Leeuwin Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COAST ENTERTAINMENT position performs unexpectedly, Leeuwin 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 Leeuwin Metals will offset losses from the drop in Leeuwin Metals' long position.
The idea behind COAST ENTERTAINMENT HOLDINGS and Leeuwin Metals 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.
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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