Correlation Between Centaurus Metals and ACDC Metals
Can any of the company-specific risk be diversified away by investing in both Centaurus Metals and ACDC 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 Centaurus Metals and ACDC Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centaurus Metals and ACDC Metals, you can compare the effects of market volatilities on Centaurus Metals and ACDC 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 Centaurus Metals with a short position of ACDC Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centaurus Metals and ACDC Metals.
Diversification Opportunities for Centaurus Metals and ACDC Metals
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Centaurus and ACDC is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Centaurus Metals and ACDC Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACDC Metals and Centaurus Metals 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 Centaurus Metals are associated (or correlated) with ACDC Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACDC Metals has no effect on the direction of Centaurus Metals i.e., Centaurus Metals and ACDC Metals go up and down completely randomly.
Pair Corralation between Centaurus Metals and ACDC Metals
Assuming the 90 days trading horizon Centaurus Metals is expected to generate 1.15 times more return on investment than ACDC Metals. However, Centaurus Metals is 1.15 times more volatile than ACDC Metals. It trades about -0.17 of its potential returns per unit of risk. ACDC Metals is currently generating about -0.43 per unit of risk. If you would invest 48.00 in Centaurus Metals on August 31, 2024 and sell it today you would lose (7.00) from holding Centaurus Metals or give up 14.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centaurus Metals vs. ACDC Metals
Performance |
| Timeline |
| Centaurus Metals |
| ACDC Metals |
Centaurus Metals and ACDC Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centaurus Metals and ACDC Metals
The main advantage of trading using opposite Centaurus Metals and ACDC Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centaurus Metals position performs unexpectedly, ACDC 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 ACDC Metals will offset losses from the drop in ACDC Metals' long position.| Centaurus Metals vs. Northern Star Resources | Centaurus Metals vs. Evolution Mining | Centaurus Metals vs. De Grey Mining |
| ACDC Metals vs. Northern Star Resources | ACDC Metals vs. Evolution Mining | ACDC Metals vs. De Grey 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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