Correlation Between Centamin PLC and Antofagasta PLC

Can any of the company-specific risk be diversified away by investing in both Centamin PLC and Antofagasta 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 Centamin PLC and Antofagasta PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Centamin PLC and Antofagasta PLC, you can compare the effects of market volatilities on Centamin PLC and Antofagasta 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 Centamin PLC with a short position of Antofagasta PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centamin PLC and Antofagasta PLC.

Diversification Opportunities for Centamin PLC and Antofagasta PLC

0.06

Correlation Coefficient

Centamin PLC  Antofagasta PLC

Significant diversification

The 3 months correlation between Centamin and Antofagasta is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Centamin PLC and Antofagasta PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antofagasta PLC and Centamin PLC 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 Centamin PLC are associated (or correlated) with Antofagasta PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antofagasta PLC has no effect on the direction of Centamin PLC i.e., Centamin PLC and Antofagasta PLC go up and down completely randomly.

Pair Corralation between Centamin PLC and Antofagasta PLC

Assuming the 90 days trading horizon Centamin PLC is expected to generate 1.0 times more return on investment than Antofagasta PLC. However, Centamin PLC is 1.0 times less risky than Antofagasta PLC. It trades about 0.1 of its potential returns per unit of risk. Antofagasta PLC is currently generating about 0.04 per unit of risk. If you would invest  8,460  in Centamin PLC on July 23, 2024 and sell it today you would earn a total of  8,330  from holding Centamin PLC or generate 98.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Centamin PLC  vs.  Antofagasta PLC

Centamin PLC

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Centamin PLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Centamin PLC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Antofagasta PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Antofagasta PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Antofagasta PLC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Centamin PLC and Antofagasta PLC

The main advantage of trading using opposite Centamin PLC and Antofagasta PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centamin PLC position performs unexpectedly, Antofagasta 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 Antofagasta PLC will offset losses from the drop in Antofagasta PLC's long position.

The idea behind Centamin PLC and Antofagasta PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.