Correlation Between Cobalt Blue and Centaurus Metals

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

By analyzing existing cross correlation between Cobalt Blue Holdings and Centaurus Metals Limited, you can compare the effects of market volatilities on Cobalt Blue 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 Cobalt Blue with a short position of Centaurus Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cobalt Blue and Centaurus Metals.

Diversification Opportunities for Cobalt Blue and Centaurus Metals

0.08

Correlation Coefficient

Cobalt Blue  Centaurus Metals

Significant diversification

The 3 months correlation between Cobalt and Centaurus is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Cobalt Blue Holdings and Centaurus Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaurus Metals and Cobalt Blue 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 Cobalt Blue Holdings 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 Cobalt Blue i.e., Cobalt Blue and Centaurus Metals go up and down completely randomly.

Pair Corralation between Cobalt Blue and Centaurus Metals

Assuming the 90 days horizon Cobalt Blue Holdings is expected to under-perform the Centaurus Metals. In addition to that, Cobalt Blue is 1.49 times more volatile than Centaurus Metals Limited. It trades about -0.16 of its total potential returns per unit of risk. Centaurus Metals Limited is currently generating about -0.09 per unit of volatility. If you would invest  32.00  in Centaurus Metals Limited on August 31, 2024 and sell it today you would lose (4.00) from holding Centaurus Metals Limited or give up 12.5% of portfolio value over 90 days.

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

Cobalt Blue Holdings  vs.  Centaurus Metals Limited

Cobalt Blue Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cobalt Blue Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Cobalt Blue is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Centaurus Metals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Centaurus Metals Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Centaurus Metals may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Cobalt Blue and Centaurus Metals

The main advantage of trading using opposite Cobalt Blue and Centaurus Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cobalt Blue 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.

The idea behind Cobalt Blue Holdings and Centaurus Metals Limited 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.