Correlation Between Iluka Resources and Centaurus Metals
Can any of the company-specific risk be diversified away by investing in both Iluka Resources 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 Iluka Resources and Centaurus Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iluka Resources and Centaurus Metals, you can compare the effects of market volatilities on Iluka Resources 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 Iluka Resources with a short position of Centaurus Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iluka Resources and Centaurus Metals.
Diversification Opportunities for Iluka Resources and Centaurus Metals
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Iluka and Centaurus is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Iluka Resources and Centaurus Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaurus Metals and Iluka Resources 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 Iluka Resources 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 Iluka Resources i.e., Iluka Resources and Centaurus Metals go up and down completely randomly.
Pair Corralation between Iluka Resources and Centaurus Metals
Assuming the 90 days trading horizon Iluka Resources is expected to under-perform the Centaurus Metals. But the stock apears to be less risky and, when comparing its historical volatility, Iluka Resources is 1.21 times less risky than Centaurus Metals. The stock trades about -0.26 of its potential returns per unit of risk. The Centaurus Metals is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 35.00 in Centaurus Metals on November 5, 2024 and sell it today you would earn a total of 5.00 from holding Centaurus Metals or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iluka Resources vs. Centaurus Metals
Performance |
| Timeline |
| Iluka Resources |
| Centaurus Metals |
Iluka Resources and Centaurus Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iluka Resources and Centaurus Metals
The main advantage of trading using opposite Iluka Resources and Centaurus Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iluka Resources 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.| Iluka Resources vs. Land Homes Group | Iluka Resources vs. Perpetual Credit Income | Iluka Resources vs. Pure Foods Tasmania | Iluka Resources vs. Kkr Credit Income |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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