Correlation Between G8 Education and Centaurus Metals
Can any of the company-specific risk be diversified away by investing in both G8 Education and Centaurus 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 G8 Education and Centaurus Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G8 Education and Centaurus Metals, you can compare the effects of market volatilities on G8 Education and Centaurus 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 G8 Education with a short position of Centaurus Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of G8 Education and Centaurus Metals.
Diversification Opportunities for G8 Education and Centaurus Metals
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GEM and Centaurus is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding G8 Education and Centaurus Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaurus Metals and G8 Education 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 G8 Education are associated (or correlated) with Centaurus Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaurus Metals has no effect on the direction of G8 Education i.e., G8 Education and Centaurus Metals go up and down completely randomly.
Pair Corralation between G8 Education and Centaurus Metals
Assuming the 90 days trading horizon G8 Education is expected to generate 0.43 times more return on investment than Centaurus Metals. However, G8 Education is 2.35 times less risky than Centaurus Metals. It trades about 0.03 of its potential returns per unit of risk. Centaurus Metals is currently generating about -0.03 per unit of risk. If you would invest 117.00 in G8 Education on November 5, 2024 and sell it today you would earn a total of 22.00 from holding G8 Education or generate 18.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G8 Education vs. Centaurus Metals
Performance |
| Timeline |
| G8 Education |
| Centaurus Metals |
G8 Education and Centaurus Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G8 Education and Centaurus Metals
The main advantage of trading using opposite G8 Education and Centaurus Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G8 Education position performs unexpectedly, Centaurus 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 Centaurus Metals will offset losses from the drop in Centaurus Metals' long position.| G8 Education vs. Vulcan Steel | G8 Education vs. Healthco Healthcare and | G8 Education vs. Oneview Healthcare PLC | G8 Education vs. Legacy Iron Ore |
| Centaurus Metals vs. Epsilon Healthcare | Centaurus Metals vs. Clime Investment Management | Centaurus Metals vs. Vitura Health Limited | Centaurus Metals vs. Sonic Healthcare |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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