Correlation Between Metals Exploration and Central Asia
Can any of the company-specific risk be diversified away by investing in both Metals Exploration 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 Metals Exploration and Central Asia 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 Central Asia Metals, you can compare the effects of market volatilities on Metals Exploration 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 Metals Exploration with a short position of Central Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metals Exploration and Central Asia.
Diversification Opportunities for Metals Exploration and Central Asia
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Metals and Central is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Metals Exploration Plc 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 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 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 Metals Exploration i.e., Metals Exploration and Central Asia go up and down completely randomly.
Pair Corralation between Metals Exploration and Central Asia
Assuming the 90 days trading horizon Metals Exploration Plc is expected to under-perform the Central Asia. In addition to that, Metals Exploration is 2.45 times more volatile than Central Asia Metals. It trades about -0.04 of its total potential returns per unit of risk. Central Asia Metals is currently generating about 0.03 per unit of volatility. If you would invest 16,000 in Central Asia Metals on September 16, 2024 and sell it today you would earn a total of 120.00 from holding Central Asia Metals or generate 0.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Metals Exploration Plc vs. Central Asia Metals
Performance |
Timeline |
Metals Exploration Plc |
Central Asia Metals |
Metals Exploration and Central Asia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Metals Exploration and Central Asia
The main advantage of trading using opposite Metals Exploration and Central Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metals Exploration 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.Metals Exploration vs. Givaudan SA | Metals Exploration vs. Antofagasta PLC | Metals Exploration vs. Ferrexpo PLC | Metals Exploration vs. Atalaya Mining |
Central Asia vs. Givaudan SA | Central Asia vs. Antofagasta PLC | Central Asia vs. Ferrexpo PLC | Central Asia vs. Atalaya Mining |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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