Correlation Between Centaurus Metals and Retail Food

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

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

Diversification Opportunities for Centaurus Metals and Retail Food

-0.26

Correlation Coefficient

Centaurus Metals  Retail Food

Very good diversification

The 3 months correlation between Centaurus and Retail is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Centaurus Metals and Retail Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Food Group and Centaurus 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 Centaurus Metals are associated (or correlated) with Retail Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Food Group has no effect on the direction of Centaurus Metals i.e., Centaurus Metals and Retail Food go up and down completely randomly.

Pair Corralation between Centaurus Metals and Retail Food

Assuming the 90 days trading horizon Centaurus Metals is expected to under-perform the Retail Food. In addition to that, Centaurus Metals is 1.59 times more volatile than Retail Food Group. It trades about -0.07 of its total potential returns per unit of risk. Retail Food Group is currently generating about -0.02 per unit of volatility. If you would invest  268.00  in Retail Food Group on September 26, 2024 and sell it today you would lose (13.00) from holding Retail Food Group or give up 4.85% of portfolio value over 90 days.

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

Centaurus Metals  vs.  Retail Food Group

Centaurus Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centaurus Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary 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.

Retail Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Retail Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Retail Food is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Centaurus Metals and Retail Food

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

The idea behind Centaurus Metals and Retail Food 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.