Correlation Between Centaurus Metals and Nobel Resources

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Can any of the company-specific risk be diversified away by investing in both Centaurus Metals and Nobel 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 Nobel 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 Nobel Resources Corp, you can compare the effects of market volatilities on Centaurus Metals and Nobel 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 Nobel Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centaurus Metals and Nobel Resources.

Diversification Opportunities for Centaurus Metals and Nobel Resources

CentaurusNobelDiversified AwayCentaurusNobelDiversified Away100%
0.39
  Correlation Coefficient

Weak diversification

The 3 months correlation between Centaurus and Nobel is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Centaurus Metals Limited and Nobel Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nobel Resources Corp 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 Nobel Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nobel Resources Corp has no effect on the direction of Centaurus Metals i.e., Centaurus Metals and Nobel Resources go up and down completely randomly.

Pair Corralation between Centaurus Metals and Nobel Resources

Assuming the 90 days horizon Centaurus Metals Limited is expected to generate 2.57 times more return on investment than Nobel Resources. However, Centaurus Metals is 2.57 times more volatile than Nobel Resources Corp. It trades about 0.02 of its potential returns per unit of risk. Nobel Resources Corp is currently generating about -0.15 per unit of risk. If you would invest  24.00  in Centaurus Metals Limited on November 26, 2024 and sell it today you would earn a total of  0.00  from holding Centaurus Metals Limited or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.24%
ValuesDaily Returns

Centaurus Metals Limited  vs.  Nobel Resources Corp

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -40-30-20-10010
JavaScript chart by amCharts 3.21.15CTTZF NBTRF
       Timeline  
Centaurus Metals 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Centaurus Metals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.210.220.230.240.250.260.270.280.290.3
Nobel Resources Corp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Nobel Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.0220.0240.0260.0280.030.0320.034

Centaurus Metals and Nobel Resources Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.74-5.8-3.85-1.91-0.0321.863.775.697.619.53 0.01450.01500.01550.01600.01650.0170
JavaScript chart by amCharts 3.21.15CTTZF NBTRF
       Returns  

Pair Trading with Centaurus Metals and Nobel Resources

The main advantage of trading using opposite Centaurus Metals and Nobel Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centaurus Metals position performs unexpectedly, Nobel 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 Nobel Resources will offset losses from the drop in Nobel Resources' long position.
The idea behind Centaurus Metals Limited and Nobel Resources Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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