Correlation Between Central Asia and Auction Technology

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

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

Diversification Opportunities for Central Asia and Auction Technology

-0.65

Correlation Coefficient

Central Asia  Auction Technology

Excellent diversification

The 3 months correlation between Central and Auction is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Central Asia Metals and Auction Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auction Technology and Central Asia 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 Central Asia Metals are associated (or correlated) with Auction Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auction Technology has no effect on the direction of Central Asia i.e., Central Asia and Auction Technology go up and down completely randomly.

Pair Corralation between Central Asia and Auction Technology

Assuming the 90 days trading horizon Central Asia Metals is expected to under-perform the Auction Technology. But the stock apears to be less risky and, when comparing its historical volatility, Central Asia Metals is 2.04 times less risky than Auction Technology. The stock trades about -0.23 of its potential returns per unit of risk. The Auction Technology Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  41,700  in Auction Technology Group on September 24, 2024 and sell it today you would earn a total of  13,600  from holding Auction Technology Group or generate 32.61% return on investment over 90 days.

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

Central Asia Metals  vs.  Auction Technology Group

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Auction Technology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Auction Technology Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Auction Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Central Asia and Auction Technology

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

The idea behind Central Asia Metals and Auction Technology Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.