Correlation Between Centamin PLC and Helium One

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

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

Diversification Opportunities for Centamin PLC and Helium One

-0.37

Correlation Coefficient

Centamin PLC  Helium One

Very good diversification

The 3 months correlation between Centamin and Helium is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Centamin PLC and Helium One Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helium One Global 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 Helium One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helium One Global has no effect on the direction of Centamin PLC i.e., Centamin PLC and Helium One go up and down completely randomly.

Pair Corralation between Centamin PLC and Helium One

Assuming the 90 days trading horizon Centamin PLC is expected to generate 0.79 times more return on investment than Helium One. However, Centamin PLC is 1.26 times less risky than Helium One. It trades about 0.11 of its potential returns per unit of risk. Helium One Global is currently generating about -0.01 per unit of risk. If you would invest  12,020  in Centamin PLC on September 5, 2024 and sell it today you would earn a total of  2,580  from holding Centamin PLC or generate 21.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	89.23%
Values	Daily Returns

Centamin PLC  vs.  Helium One Global

Centamin PLC

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Centamin PLC has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Helium One Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Helium One Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Helium One is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Centamin PLC and Helium One

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

The idea behind Centamin PLC and Helium One Global 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.