Correlation Between Centamin PLC and Central Asia

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

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

Diversification Opportunities for Centamin PLC and Central Asia

-0.28

Correlation Coefficient

Centamin PLC  Central Asia

Very good diversification

The 3 months correlation between Centamin and Central is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Centamin 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 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 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 Centamin PLC i.e., Centamin PLC and Central Asia go up and down completely randomly.

Pair Corralation between Centamin PLC and Central Asia

Assuming the 90 days trading horizon Centamin PLC is expected to generate 1.67 times more return on investment than Central Asia. However, Centamin PLC is 1.67 times more volatile than Central Asia Metals. It trades about 0.15 of its potential returns per unit of risk. Central Asia Metals is currently generating about -0.08 per unit of risk. If you would invest  11,334  in Centamin PLC on June 20, 2024 and sell it today you would earn a total of  3,856  from holding Centamin PLC or generate 34.02% return on investment over 90 days.

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

Centamin PLC  vs.  Central Asia Metals

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.

Central Asia Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Central Asia Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Centamin PLC and Central Asia

The main advantage of trading using opposite Centamin PLC and Central Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centamin PLC 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.

The idea behind Centamin PLC and Central Asia Metals 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.