Correlation Between Collins Foods and Centaurus Metals
Can any of the company-specific risk be diversified away by investing in both Collins Foods and Centaurus 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 Collins Foods and Centaurus Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods and Centaurus Metals, you can compare the effects of market volatilities on Collins Foods and Centaurus 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 Collins Foods with a short position of Centaurus Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Centaurus Metals.
Diversification Opportunities for Collins Foods and Centaurus Metals
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Collins and Centaurus is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Centaurus Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaurus Metals and Collins Foods 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 Collins Foods are associated (or correlated) with Centaurus Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaurus Metals has no effect on the direction of Collins Foods i.e., Collins Foods and Centaurus Metals go up and down completely randomly.
Pair Corralation between Collins Foods and Centaurus Metals
Assuming the 90 days trading horizon Collins Foods is expected to under-perform the Centaurus Metals. But the stock apears to be less risky and, when comparing its historical volatility, Collins Foods is 2.79 times less risky than Centaurus Metals. The stock trades about -0.03 of its potential returns per unit of risk. The Centaurus Metals is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 52.00 in Centaurus Metals on August 25, 2024 and sell it today you would lose (9.00) from holding Centaurus Metals or give up 17.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collins Foods vs. Centaurus Metals
Performance |
| Timeline |
| Collins Foods |
| Centaurus Metals |
Collins Foods and Centaurus Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Centaurus Metals
The main advantage of trading using opposite Collins Foods and Centaurus Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods position performs unexpectedly, Centaurus 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 Centaurus Metals will offset losses from the drop in Centaurus Metals' long position.| Collins Foods vs. Australian Agricultural | Collins Foods vs. Super Retail Group | Collins Foods vs. ABACUS STORAGE KING | Collins Foods vs. Qbe Insurance Group |
| Centaurus Metals vs. Northern Star Resources | Centaurus Metals vs. Evolution Mining | Centaurus Metals vs. Bluescope Steel | Centaurus Metals vs. Sandfire Resources NL |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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