Correlation Between European Metals and Centamin PLC
Can any of the company-specific risk be diversified away by investing in both European Metals and Centamin PLC 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 European Metals and Centamin PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Metals Holdings and Centamin PLC, you can compare the effects of market volatilities on European Metals and Centamin PLC 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 European Metals with a short position of Centamin PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Centamin PLC.
Diversification Opportunities for European Metals and Centamin PLC
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between European and Centamin is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Centamin PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centamin PLC and European 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 European Metals Holdings are associated (or correlated) with Centamin PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centamin PLC has no effect on the direction of European Metals i.e., European Metals and Centamin PLC go up and down completely randomly.
Pair Corralation between European Metals and Centamin PLC
Assuming the 90 days trading horizon European Metals Holdings is expected to generate 0.92 times more return on investment than Centamin PLC. However, European Metals Holdings is 1.08 times less risky than Centamin PLC. It trades about -0.1 of its potential returns per unit of risk. Centamin PLC is currently generating about -0.17 per unit of risk. If you would invest 825.00 in European Metals Holdings on September 2, 2024 and sell it today you would lose (42.00) from holding European Metals Holdings or give up 5.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 77.27% |
| Values | Daily Returns |
European Metals Holdings vs. Centamin PLC
Performance |
| Timeline |
| European Metals Holdings |
| Centamin PLC |
European Metals and Centamin PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Centamin PLC
The main advantage of trading using opposite European Metals and Centamin PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals position performs unexpectedly, Centamin PLC 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 Centamin PLC will offset losses from the drop in Centamin PLC's long position.| European Metals vs. Gaztransport et Technigaz | European Metals vs. Charter Communications Cl | European Metals vs. Telecom Italia SpA | European Metals vs. Public Storage |
| Centamin PLC vs. Givaudan SA | Centamin PLC vs. Antofagasta PLC | Centamin PLC vs. Atalaya Mining | Centamin PLC vs. Ferrexpo PLC |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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