Correlation Between De Grey and Centrex Metals
Can any of the company-specific risk be diversified away by investing in both De Grey and Centrex Metals 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 De Grey and Centrex Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Grey Mining and Centrex Metals, you can compare the effects of market volatilities on De Grey and Centrex Metals 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 De Grey with a short position of Centrex Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Grey and Centrex Metals.
Diversification Opportunities for De Grey and Centrex Metals
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between DEG and Centrex is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining and Centrex Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrex Metals and De Grey 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 De Grey Mining are associated (or correlated) with Centrex Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrex Metals has no effect on the direction of De Grey i.e., De Grey and Centrex Metals go up and down completely randomly.
Pair Corralation between De Grey and Centrex Metals
Assuming the 90 days trading horizon De Grey Mining is expected to generate 1.21 times more return on investment than Centrex Metals. However, De Grey is 1.21 times more volatile than Centrex Metals. It trades about 0.16 of its potential returns per unit of risk. Centrex Metals is currently generating about -0.31 per unit of risk. If you would invest 150.00 in De Grey Mining on September 29, 2024 and sell it today you would earn a total of 31.00 from holding De Grey Mining or generate 20.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
De Grey Mining vs. Centrex Metals
Performance |
| Timeline |
| De Grey Mining |
| Centrex Metals |
De Grey and Centrex Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Grey and Centrex Metals
The main advantage of trading using opposite De Grey and Centrex Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Grey position performs unexpectedly, Centrex Metals 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 Centrex Metals will offset losses from the drop in Centrex Metals' long position.| De Grey vs. Regal Funds Management | De Grey vs. Flagship Investments | De Grey vs. Carawine Resources Limited | De Grey vs. Treasury Wine Estates |
| Centrex Metals vs. Neurotech International | Centrex Metals vs. Magellan Financial Group | Centrex Metals vs. National Australia Bank | Centrex Metals vs. Ainsworth Game Technology |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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