Correlation Between Centamin PLC and Golden Metal
Can any of the company-specific risk be diversified away by investing in both Centamin PLC and Golden Metal 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 Golden Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centamin PLC and Golden Metal Resources, you can compare the effects of market volatilities on Centamin PLC and Golden Metal 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 Golden Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centamin PLC and Golden Metal.
Diversification Opportunities for Centamin PLC and Golden Metal
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Centamin and Golden is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Centamin PLC and Golden Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Metal Resources 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 Golden Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Metal Resources has no effect on the direction of Centamin PLC i.e., Centamin PLC and Golden Metal go up and down completely randomly.
Pair Corralation between Centamin PLC and Golden Metal
Assuming the 90 days trading horizon Centamin PLC is expected to under-perform the Golden Metal. But the stock apears to be less risky and, when comparing its historical volatility, Centamin PLC is 2.53 times less risky than Golden Metal. The stock trades about -0.23 of its potential returns per unit of risk. The Golden Metal Resources is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,600 in Golden Metal Resources on August 27, 2024 and sell it today you would earn a total of 600.00 from holding Golden Metal Resources or generate 23.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centamin PLC vs. Golden Metal Resources
Performance |
| Timeline |
| Centamin PLC |
| Golden Metal Resources |
Centamin PLC and Golden Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centamin PLC and Golden Metal
The main advantage of trading using opposite Centamin PLC and Golden Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centamin PLC position performs unexpectedly, Golden Metal 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 Golden Metal will offset losses from the drop in Golden Metal's long position.| Centamin PLC vs. Tata Steel Limited | Centamin PLC vs. Cardinal Health | Centamin PLC vs. Target Healthcare REIT | Centamin PLC vs. Ironveld Plc |
| Golden Metal vs. Regions Financial Corp | Golden Metal vs. Panther Metals PLC | Golden Metal vs. Adriatic Metals | Golden Metal vs. Ally Financial |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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