Correlation Between Centaurus Metals and Southern Cross
Can any of the company-specific risk be diversified away by investing in both Centaurus Metals and Southern Cross 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 Southern Cross into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centaurus Metals and Southern Cross Gold, you can compare the effects of market volatilities on Centaurus Metals and Southern Cross 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 Southern Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centaurus Metals and Southern Cross.
Diversification Opportunities for Centaurus Metals and Southern Cross
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Centaurus and Southern is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Centaurus Metals and Southern Cross Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Cross Gold 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 Southern Cross. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Cross Gold has no effect on the direction of Centaurus Metals i.e., Centaurus Metals and Southern Cross go up and down completely randomly.
Pair Corralation between Centaurus Metals and Southern Cross
Assuming the 90 days trading horizon Centaurus Metals is expected to under-perform the Southern Cross. But the stock apears to be less risky and, when comparing its historical volatility, Centaurus Metals is 1.3 times less risky than Southern Cross. The stock trades about -0.02 of its potential returns per unit of risk. The Southern Cross Gold is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 74.00 in Southern Cross Gold on September 12, 2024 and sell it today you would earn a total of 273.00 from holding Southern Cross Gold or generate 368.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centaurus Metals vs. Southern Cross Gold
Performance |
| Timeline |
| Centaurus Metals |
| Southern Cross Gold |
Centaurus Metals and Southern Cross Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centaurus Metals and Southern Cross
The main advantage of trading using opposite Centaurus Metals and Southern Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centaurus Metals position performs unexpectedly, Southern Cross 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 Southern Cross will offset losses from the drop in Southern Cross' 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 |
| Southern Cross vs. Farm Pride Foods | Southern Cross vs. Iron Road | Southern Cross vs. Bluescope Steel | Southern Cross vs. Spirit Telecom |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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