Correlation Between Metals Exploration and Centamin PLC
Can any of the company-specific risk be diversified away by investing in both Metals Exploration 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 Metals Exploration and Centamin PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metals Exploration Plc and Centamin PLC, you can compare the effects of market volatilities on Metals Exploration 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 Metals Exploration with a short position of Centamin PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metals Exploration and Centamin PLC.
Diversification Opportunities for Metals Exploration and Centamin PLC
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Metals and Centamin is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Metals Exploration Plc and Centamin PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centamin PLC and Metals Exploration 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 Metals Exploration Plc 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 Metals Exploration i.e., Metals Exploration and Centamin PLC go up and down completely randomly.
Pair Corralation between Metals Exploration and Centamin PLC
Assuming the 90 days trading horizon Metals Exploration Plc is expected to generate 1.84 times more return on investment than Centamin PLC. However, Metals Exploration is 1.84 times more volatile than Centamin PLC. It trades about 0.09 of its potential returns per unit of risk. Centamin PLC is currently generating about 0.05 per unit of risk. If you would invest 190.00 in Metals Exploration Plc on August 26, 2024 and sell it today you would earn a total of 385.00 from holding Metals Exploration Plc or generate 202.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metals Exploration Plc vs. Centamin PLC
Performance |
| Timeline |
| Metals Exploration Plc |
| Centamin PLC |
Metals Exploration and Centamin PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metals Exploration and Centamin PLC
The main advantage of trading using opposite Metals Exploration and Centamin PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metals Exploration 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.| Metals Exploration vs. Solstad Offshore ASA | Metals Exploration vs. Orient Telecoms | Metals Exploration vs. Spirent Communications plc | Metals Exploration vs. SBM Offshore NV |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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