Correlation Between Centaurus Metals and Artemis Resources

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

By analyzing existing cross correlation between Centaurus Metals Limited and Artemis Resources, you can compare the effects of market volatilities on Centaurus Metals and Artemis Resources 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 Artemis Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centaurus Metals and Artemis Resources.

Diversification Opportunities for Centaurus Metals and Artemis Resources

0.06

Correlation Coefficient

Centaurus Metals  Artemis Resources

Significant diversification

The 3 months correlation between Centaurus and Artemis is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Centaurus Metals Limited and Artemis Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artemis Resources 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 Limited are associated (or correlated) with Artemis Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artemis Resources has no effect on the direction of Centaurus Metals i.e., Centaurus Metals and Artemis Resources go up and down completely randomly.

Pair Corralation between Centaurus Metals and Artemis Resources

Assuming the 90 days horizon Centaurus Metals is expected to generate 13.39 times less return on investment than Artemis Resources. But when comparing it to its historical volatility, Centaurus Metals Limited is 6.44 times less risky than Artemis Resources. It trades about 0.04 of its potential returns per unit of risk. Artemis Resources is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1.30  in Artemis Resources on September 2, 2024 and sell it today you would lose (0.80) from holding Artemis Resources or give up 61.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Centaurus Metals Limited  vs.  Artemis Resources

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 uncertain basic indicators, Centaurus Metals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Artemis Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Artemis Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Artemis Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Centaurus Metals and Artemis Resources

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

The idea behind Centaurus Metals Limited and Artemis Resources 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.