Correlation Between Centamin PLC and Caledonia Mining
Can any of the company-specific risk be diversified away by investing in both Centamin PLC and Caledonia Mining 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 Centamin PLC and Caledonia Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centamin PLC and Caledonia Mining, you can compare the effects of market volatilities on Centamin PLC and Caledonia Mining 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 Centamin PLC with a short position of Caledonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centamin PLC and Caledonia Mining.
Diversification Opportunities for Centamin PLC and Caledonia Mining
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Centamin and Caledonia is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Centamin PLC and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining and Centamin PLC 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 Centamin PLC are associated (or correlated) with Caledonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Mining has no effect on the direction of Centamin PLC i.e., Centamin PLC and Caledonia Mining go up and down completely randomly.
Pair Corralation between Centamin PLC and Caledonia Mining
Assuming the 90 days trading horizon Centamin PLC is expected to generate 0.79 times more return on investment than Caledonia Mining. However, Centamin PLC is 1.26 times less risky than Caledonia Mining. It trades about -0.04 of its potential returns per unit of risk. Caledonia Mining is currently generating about -0.18 per unit of risk. If you would invest 15,310 in Centamin PLC on August 28, 2024 and sell it today you would lose (710.00) from holding Centamin PLC or give up 4.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Centamin PLC vs. Caledonia Mining
Performance |
| Timeline |
| Centamin PLC |
| Caledonia Mining |
Centamin PLC and Caledonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centamin PLC and Caledonia Mining
The main advantage of trading using opposite Centamin PLC and Caledonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centamin PLC position performs unexpectedly, Caledonia Mining 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 Caledonia Mining will offset losses from the drop in Caledonia Mining's long position.| Centamin PLC vs. Givaudan SA | Centamin PLC vs. Antofagasta PLC | Centamin PLC vs. Atalaya Mining | Centamin PLC vs. Amaroq Minerals |
| Caledonia Mining vs. Givaudan SA | Caledonia Mining vs. Antofagasta PLC | Caledonia Mining vs. Centamin PLC | Caledonia Mining 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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