Correlation Between Centamin PLC and Europa Metals
Can any of the company-specific risk be diversified away by investing in both Centamin PLC and Europa 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 Centamin PLC and Europa Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centamin PLC and Europa Metals, you can compare the effects of market volatilities on Centamin PLC and Europa 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 Centamin PLC with a short position of Europa Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centamin PLC and Europa Metals.
Diversification Opportunities for Centamin PLC and Europa Metals
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Centamin and Europa is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Centamin PLC and Europa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europa Metals 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 Europa Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europa Metals has no effect on the direction of Centamin PLC i.e., Centamin PLC and Europa Metals go up and down completely randomly.
Pair Corralation between Centamin PLC and Europa Metals
Assuming the 90 days trading horizon Centamin PLC is expected to generate 2.46 times less return on investment than Europa Metals. But when comparing it to its historical volatility, Centamin PLC is 1.65 times less risky than Europa Metals. It trades about 0.08 of its potential returns per unit of risk. Europa Metals is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 115.00 in Europa Metals on August 30, 2024 and sell it today you would earn a total of 85.00 from holding Europa Metals or generate 73.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.66% |
| Values | Daily Returns |
Centamin PLC vs. Europa Metals
Performance |
| Timeline |
| Centamin PLC |
| Europa Metals |
Centamin PLC and Europa Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centamin PLC and Europa Metals
The main advantage of trading using opposite Centamin PLC and Europa Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centamin PLC position performs unexpectedly, Europa 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 Europa Metals will offset losses from the drop in Europa Metals' long position.| Centamin PLC vs. Wizz Air Holdings | Centamin PLC vs. Fulcrum Metals PLC | Centamin PLC vs. Silvercorp Metals | Centamin PLC vs. Porvair plc |
| Europa Metals vs. Givaudan SA | Europa Metals vs. Antofagasta PLC | Europa Metals vs. Centamin PLC | Europa Metals 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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