Correlation Between Centaurus Metals and Argo Investments
Can any of the company-specific risk be diversified away by investing in both Centaurus Metals and Argo Investments 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 Argo Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centaurus Metals and Argo Investments, you can compare the effects of market volatilities on Centaurus Metals and Argo Investments 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 Argo Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centaurus Metals and Argo Investments.
Diversification Opportunities for Centaurus Metals and Argo Investments
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Centaurus and Argo is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Centaurus Metals and Argo Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Investments 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 Argo Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Investments has no effect on the direction of Centaurus Metals i.e., Centaurus Metals and Argo Investments go up and down completely randomly.
Pair Corralation between Centaurus Metals and Argo Investments
Assuming the 90 days trading horizon Centaurus Metals is expected to under-perform the Argo Investments. In addition to that, Centaurus Metals is 7.84 times more volatile than Argo Investments. It trades about -0.08 of its total potential returns per unit of risk. Argo Investments is currently generating about 0.17 per unit of volatility. If you would invest 886.00 in Argo Investments on August 28, 2024 and sell it today you would earn a total of 17.00 from holding Argo Investments or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centaurus Metals vs. Argo Investments
Performance |
| Timeline |
| Centaurus Metals |
| Argo Investments |
Centaurus Metals and Argo Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centaurus Metals and Argo Investments
The main advantage of trading using opposite Centaurus Metals and Argo Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centaurus Metals position performs unexpectedly, Argo Investments 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 Argo Investments will offset losses from the drop in Argo Investments' long position.| Centaurus Metals vs. Northern Star Resources | Centaurus Metals vs. Evolution Mining | Centaurus Metals vs. Bluescope Steel | Centaurus Metals vs. Sandfire Resources NL |
| Argo Investments vs. Land Homes Group | Argo Investments vs. Retail Food Group | Argo Investments vs. REGAL ASIAN INVESTMENTS | Argo Investments vs. Lendlease Group |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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