Correlation Between Red Moon and Centaurus Metals
Can any of the company-specific risk be diversified away by investing in both Red Moon 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 Red Moon and Centaurus Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Moon Resources and Centaurus Metals Limited, you can compare the effects of market volatilities on Red Moon 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 Red Moon with a short position of Centaurus Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Moon and Centaurus Metals.
Diversification Opportunities for Red Moon and Centaurus Metals
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Red and Centaurus is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Red Moon Resources and Centaurus Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaurus Metals and Red Moon 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 Red Moon 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 Red Moon i.e., Red Moon and Centaurus Metals go up and down completely randomly.
Pair Corralation between Red Moon and Centaurus Metals
Assuming the 90 days horizon Red Moon is expected to generate 25.15 times less return on investment than Centaurus Metals. But when comparing it to its historical volatility, Red Moon Resources is 1.99 times less risky than Centaurus Metals. It trades about 0.01 of its potential returns per unit of risk. Centaurus Metals Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Centaurus Metals Limited on August 25, 2024 and sell it today you would earn a total of 11.00 from holding Centaurus Metals Limited or generate 64.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.48% |
| Values | Daily Returns |
Red Moon Resources vs. Centaurus Metals Limited
Performance |
| Timeline |
| Red Moon Resources |
| Centaurus Metals |
Red Moon and Centaurus Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Moon and Centaurus Metals
The main advantage of trading using opposite Red Moon and Centaurus Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Moon 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.| Red Moon vs. Norra Metals Corp | Red Moon vs. ZincX Resources Corp | Red Moon vs. Nuinsco Resources Limited | Red Moon vs. South Star Battery |
| Centaurus Metals vs. Norra Metals Corp | Centaurus Metals vs. ZincX Resources Corp | Centaurus Metals vs. Nuinsco Resources Limited | Centaurus Metals vs. South Star Battery |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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