Correlation Between Centaurus Metals and Lotus Resources
Can any of the company-specific risk be diversified away by investing in both Centaurus Metals and Lotus Resources 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 Lotus Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centaurus Metals Limited and Lotus Resources Limited, you can compare the effects of market volatilities on Centaurus Metals and Lotus Resources 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 Lotus Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centaurus Metals and Lotus Resources.
Diversification Opportunities for Centaurus Metals and Lotus Resources
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Centaurus and Lotus is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Centaurus Metals Limited and Lotus Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Resources 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 Limited are associated (or correlated) with Lotus Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Resources has no effect on the direction of Centaurus Metals i.e., Centaurus Metals and Lotus Resources go up and down completely randomly.
Pair Corralation between Centaurus Metals and Lotus Resources
Assuming the 90 days horizon Centaurus Metals Limited is expected to generate 1.6 times more return on investment than Lotus Resources. However, Centaurus Metals is 1.6 times more volatile than Lotus Resources Limited. It trades about 0.03 of its potential returns per unit of risk. Lotus Resources Limited is currently generating about 0.01 per unit of risk. If you would invest 33.00 in Centaurus Metals Limited on August 25, 2024 and sell it today you would lose (5.00) from holding Centaurus Metals Limited or give up 15.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Centaurus Metals Limited vs. Lotus Resources Limited
Performance |
| Timeline |
| Centaurus Metals |
| Lotus Resources |
Centaurus Metals and Lotus Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centaurus Metals and Lotus Resources
The main advantage of trading using opposite Centaurus Metals and Lotus Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centaurus Metals position performs unexpectedly, Lotus Resources 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 Lotus Resources will offset losses from the drop in Lotus Resources' long position.| Centaurus Metals vs. Norra Metals Corp | Centaurus Metals vs. ZincX Resources Corp | Centaurus Metals vs. Nuinsco Resources Limited | Centaurus Metals vs. South Star Battery |
| Lotus Resources vs. Filo Mining Corp | Lotus Resources vs. Golden Goliath Resources | Lotus Resources vs. Stria Lithium | Lotus Resources vs. Monitor Ventures |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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