Correlation Between Centaurus Metals and EROAD
Can any of the company-specific risk be diversified away by investing in both Centaurus Metals and EROAD 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 EROAD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centaurus Metals and EROAD, you can compare the effects of market volatilities on Centaurus Metals and EROAD 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 EROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centaurus Metals and EROAD.
Diversification Opportunities for Centaurus Metals and EROAD
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Centaurus and EROAD is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Centaurus Metals and EROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EROAD 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 EROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EROAD has no effect on the direction of Centaurus Metals i.e., Centaurus Metals and EROAD go up and down completely randomly.
Pair Corralation between Centaurus Metals and EROAD
Assuming the 90 days trading horizon Centaurus Metals is expected to under-perform the EROAD. In addition to that, Centaurus Metals is 2.33 times more volatile than EROAD. It trades about -0.05 of its total potential returns per unit of risk. EROAD is currently generating about 0.01 per unit of volatility. If you would invest 97.00 in EROAD on November 29, 2024 and sell it today you would earn a total of 0.00 from holding EROAD or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centaurus Metals vs. EROAD
Performance |
| Timeline |
| Centaurus Metals |
| EROAD |
Centaurus Metals and EROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centaurus Metals and EROAD
The main advantage of trading using opposite Centaurus Metals and EROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centaurus Metals position performs unexpectedly, EROAD 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 EROAD will offset losses from the drop in EROAD's long position.| Centaurus Metals vs. Technology One | Centaurus Metals vs. Australian Unity Office | Centaurus Metals vs. Catalyst Metals | Centaurus Metals vs. Sky Metals |
| EROAD vs. Mirrabooka Investments | EROAD vs. Arc Funds | EROAD vs. BlackWall Property Funds | EROAD vs. MFF Capital Investments |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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