Correlation Between Centrex Metals and 88 Energy
Can any of the company-specific risk be diversified away by investing in both Centrex Metals and 88 Energy 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 Centrex Metals and 88 Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centrex Metals and 88 Energy, you can compare the effects of market volatilities on Centrex Metals and 88 Energy 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 Centrex Metals with a short position of 88 Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrex Metals and 88 Energy.
Diversification Opportunities for Centrex Metals and 88 Energy
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Centrex and 88E is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Centrex Metals and 88 Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 88 Energy and Centrex 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 Centrex Metals are associated (or correlated) with 88 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 88 Energy has no effect on the direction of Centrex Metals i.e., Centrex Metals and 88 Energy go up and down completely randomly.
Pair Corralation between Centrex Metals and 88 Energy
Assuming the 90 days trading horizon Centrex Metals is expected to under-perform the 88 Energy. But the stock apears to be less risky and, when comparing its historical volatility, Centrex Metals is 5.29 times less risky than 88 Energy. The stock trades about -0.08 of its potential returns per unit of risk. The 88 Energy is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.20 in 88 Energy on October 18, 2024 and sell it today you would earn a total of 0.00 from holding 88 Energy or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centrex Metals vs. 88 Energy
Performance |
| Timeline |
| Centrex Metals |
| 88 Energy |
Centrex Metals and 88 Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrex Metals and 88 Energy
The main advantage of trading using opposite Centrex Metals and 88 Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrex Metals position performs unexpectedly, 88 Energy 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 88 Energy will offset losses from the drop in 88 Energy's long position.| Centrex Metals vs. Aeris Environmental | Centrex Metals vs. Phoslock Environmental Technologies | Centrex Metals vs. Iron Road | Centrex Metals vs. Everest Metals |
| 88 Energy vs. Centrex Metals | 88 Energy vs. ABACUS STORAGE KING | 88 Energy vs. Sky Metals | 88 Energy vs. Global Health |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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