Correlation Between Commercial Metals and Centerra Gold

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

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

Diversification Opportunities for Commercial Metals and Centerra Gold

-0.48

Correlation Coefficient

Commercial Metals  Centerra Gold

Very good diversification

The 3 months correlation between Commercial and Centerra is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Metals and Centerra Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centerra Gold and Commercial Metals 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 Commercial Metals are associated (or correlated) with Centerra Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centerra Gold has no effect on the direction of Commercial Metals i.e., Commercial Metals and Centerra Gold go up and down completely randomly.

Pair Corralation between Commercial Metals and Centerra Gold

Considering the 90-day investment horizon Commercial Metals is expected to generate 1.14 times more return on investment than Centerra Gold. However, Commercial Metals is 1.14 times more volatile than Centerra Gold. It trades about -0.04 of its potential returns per unit of risk. Centerra Gold is currently generating about -0.18 per unit of risk. If you would invest  5,482  in Commercial Metals on September 27, 2024 and sell it today you would lose (432.00) from holding Commercial Metals or give up 7.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Commercial Metals  vs.  Centerra Gold

Commercial Metals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Centerra Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centerra Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent 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.

Pair Trading with Commercial Metals and Centerra Gold

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

The idea behind Commercial Metals and Centerra Gold 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.