Correlation Between Caledonia Mining and Amedeo Air
Can any of the company-specific risk be diversified away by investing in both Caledonia Mining and Amedeo Air 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 Caledonia Mining and Amedeo Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Mining and Amedeo Air Four, you can compare the effects of market volatilities on Caledonia Mining and Amedeo Air 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 Caledonia Mining with a short position of Amedeo Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Mining and Amedeo Air.
Diversification Opportunities for Caledonia Mining and Amedeo Air
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caledonia and Amedeo is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining and Amedeo Air Four in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amedeo Air Four and Caledonia Mining 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 Caledonia Mining are associated (or correlated) with Amedeo Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amedeo Air Four has no effect on the direction of Caledonia Mining i.e., Caledonia Mining and Amedeo Air go up and down completely randomly.
Pair Corralation between Caledonia Mining and Amedeo Air
Assuming the 90 days trading horizon Caledonia Mining is expected to generate 3.61 times less return on investment than Amedeo Air. In addition to that, Caledonia Mining is 2.24 times more volatile than Amedeo Air Four. It trades about 0.04 of its total potential returns per unit of risk. Amedeo Air Four is currently generating about 0.29 per unit of volatility. If you would invest 3,639 in Amedeo Air Four on September 3, 2024 and sell it today you would earn a total of 1,681 from holding Amedeo Air Four or generate 46.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caledonia Mining vs. Amedeo Air Four
Performance |
| Timeline |
| Caledonia Mining |
| Amedeo Air Four |
Caledonia Mining and Amedeo Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Mining and Amedeo Air
The main advantage of trading using opposite Caledonia Mining and Amedeo Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Mining position performs unexpectedly, Amedeo Air 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 Amedeo Air will offset losses from the drop in Amedeo Air's long position.The idea behind Caledonia Mining and Amedeo Air Four pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Amedeo Air vs. Catalyst Media Group | Amedeo Air vs. CATLIN GROUP | Amedeo Air vs. Magnora ASA | Amedeo Air vs. RTW Venture Fund |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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