Correlation Between First and Central Asia
Can any of the company-specific risk be diversified away by investing in both First and Central Asia 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 First and Central Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Class Metals and Central Asia Metals, you can compare the effects of market volatilities on First and Central Asia 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 First with a short position of Central Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of First and Central Asia.
Diversification Opportunities for First and Central Asia
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Central is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding First Class Metals and Central Asia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Asia Metals and First 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 First Class Metals are associated (or correlated) with Central Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Asia Metals has no effect on the direction of First i.e., First and Central Asia go up and down completely randomly.
Pair Corralation between First and Central Asia
Assuming the 90 days trading horizon First Class Metals is expected to under-perform the Central Asia. In addition to that, First is 2.02 times more volatile than Central Asia Metals. It trades about -0.25 of its total potential returns per unit of risk. Central Asia Metals is currently generating about -0.09 per unit of volatility. If you would invest 16,520 in Central Asia Metals on October 11, 2024 and sell it today you would lose (620.00) from holding Central Asia Metals or give up 3.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Class Metals vs. Central Asia Metals
Performance |
| Timeline |
| First Class Metals |
| Central Asia Metals |
First and Central Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First and Central Asia
The main advantage of trading using opposite First and Central Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First position performs unexpectedly, Central Asia 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 Central Asia will offset losses from the drop in Central Asia's long position.| First vs. Silvercorp Metals | First vs. Cornish Metals | First vs. Central Asia Metals | First vs. Mineral Financial Investments |
| Central Asia vs. Cornish Metals | Central Asia vs. AMG Advanced Metallurgical | Central Asia vs. Capital Metals PLC | Central Asia vs. GreenX Metals |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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