Correlation Between Centaurus Metals and South32
Can any of the company-specific risk be diversified away by investing in both Centaurus Metals and South32 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 South32 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centaurus Metals and South32, you can compare the effects of market volatilities on Centaurus Metals and South32 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 South32. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centaurus Metals and South32.
Diversification Opportunities for Centaurus Metals and South32
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Centaurus and South32 is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Centaurus Metals and South32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South32 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 South32. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South32 has no effect on the direction of Centaurus Metals i.e., Centaurus Metals and South32 go up and down completely randomly.
Pair Corralation between Centaurus Metals and South32
Assuming the 90 days trading horizon Centaurus Metals is expected to under-perform the South32. In addition to that, Centaurus Metals is 1.56 times more volatile than South32. It trades about -0.11 of its total potential returns per unit of risk. South32 is currently generating about 0.0 per unit of volatility. If you would invest 370.00 in South32 on September 12, 2024 and sell it today you would lose (2.00) from holding South32 or give up 0.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centaurus Metals vs. South32
Performance |
| Timeline |
| Centaurus Metals |
| South32 |
Centaurus Metals and South32 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centaurus Metals and South32
The main advantage of trading using opposite Centaurus Metals and South32 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centaurus Metals position performs unexpectedly, South32 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 South32 will offset losses from the drop in South32's long position.| Centaurus Metals vs. Cleanaway Waste Management | Centaurus Metals vs. Platinum Asset Management | Centaurus Metals vs. Step One Clothing | Centaurus Metals vs. Hutchison Telecommunications |
| South32 vs. BSP Financial Group | South32 vs. Sky Metals | South32 vs. Wt Financial Group | South32 vs. DY6 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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