Correlation Between Centaurus Metals and Nsx
Can any of the company-specific risk be diversified away by investing in both Centaurus Metals and Nsx 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 Nsx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centaurus Metals and Nsx, you can compare the effects of market volatilities on Centaurus Metals and Nsx 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 Nsx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centaurus Metals and Nsx.
Diversification Opportunities for Centaurus Metals and Nsx
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Centaurus and Nsx is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Centaurus Metals and Nsx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nsx 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 Nsx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nsx has no effect on the direction of Centaurus Metals i.e., Centaurus Metals and Nsx go up and down completely randomly.
Pair Corralation between Centaurus Metals and Nsx
Assuming the 90 days trading horizon Centaurus Metals is expected to generate 0.84 times more return on investment than Nsx. However, Centaurus Metals is 1.19 times less risky than Nsx. It trades about 0.08 of its potential returns per unit of risk. Nsx is currently generating about 0.04 per unit of risk. If you would invest 25.00 in Centaurus Metals on August 25, 2024 and sell it today you would earn a total of 18.00 from holding Centaurus Metals or generate 72.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.48% |
| Values | Daily Returns |
Centaurus Metals vs. Nsx
Performance |
| Timeline |
| Centaurus Metals |
| Nsx |
Centaurus Metals and Nsx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centaurus Metals and Nsx
The main advantage of trading using opposite Centaurus Metals and Nsx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centaurus Metals position performs unexpectedly, Nsx 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 Nsx will offset losses from the drop in Nsx's long position.| Centaurus Metals vs. Northern Star Resources | Centaurus Metals vs. Evolution Mining | Centaurus Metals vs. Bluescope Steel | Centaurus Metals vs. Sandfire Resources NL |
| Nsx vs. Flagship Investments | Nsx vs. A1 Investments Resources | Nsx vs. Centaurus Metals | Nsx vs. Strickland Metals |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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