Correlation Between Centerra Gold and East Africa
Can any of the company-specific risk be diversified away by investing in both Centerra Gold and East Africa 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 Centerra Gold and East Africa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centerra Gold and East Africa Metals, you can compare the effects of market volatilities on Centerra Gold and East Africa 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 Centerra Gold with a short position of East Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centerra Gold and East Africa.
Diversification Opportunities for Centerra Gold and East Africa
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Centerra and East is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Centerra Gold and East Africa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Africa Metals and Centerra Gold 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 Centerra Gold are associated (or correlated) with East Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Africa Metals has no effect on the direction of Centerra Gold i.e., Centerra Gold and East Africa go up and down completely randomly.
Pair Corralation between Centerra Gold and East Africa
If you would invest 11.00 in East Africa Metals on August 27, 2024 and sell it today you would earn a total of 0.00 from holding East Africa Metals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centerra Gold vs. East Africa Metals
Performance |
| Timeline |
| Centerra Gold |
| East Africa Metals |
Centerra Gold and East Africa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centerra Gold and East Africa
The main advantage of trading using opposite Centerra Gold and East Africa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centerra Gold position performs unexpectedly, East Africa 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 East Africa will offset losses from the drop in East Africa's long position.| Centerra Gold vs. Gold Fields Ltd | Centerra Gold vs. Eldorado Gold Corp | Centerra Gold vs. Osisko Gold Ro | Centerra Gold vs. SSR Mining |
| East Africa vs. Ascendant Resources | East Africa vs. Cantex Mine Development | East Africa vs. Amarc Resources | East Africa vs. Sterling Metals Corp |
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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