Correlation Between Centaurus Metals and Monitor Ventures

Can any of the company-specific risk be diversified away by investing in both Centaurus Metals and Monitor Ventures 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 Monitor Ventures 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 Monitor Ventures, you can compare the effects of market volatilities on Centaurus Metals and Monitor Ventures 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 Monitor Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centaurus Metals and Monitor Ventures.

Diversification Opportunities for Centaurus Metals and Monitor Ventures

0.29

Correlation Coefficient

Centaurus Metals  Monitor Ventures

Modest diversification

The 3 months correlation between Centaurus and Monitor is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Centaurus Metals Limited and Monitor Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monitor Ventures 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 Monitor Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monitor Ventures has no effect on the direction of Centaurus Metals i.e., Centaurus Metals and Monitor Ventures go up and down completely randomly.

Pair Corralation between Centaurus Metals and Monitor Ventures

Assuming the 90 days horizon Centaurus Metals is expected to generate 1.25 times less return on investment than Monitor Ventures. In addition to that, Centaurus Metals is 2.18 times more volatile than Monitor Ventures. It trades about 0.04 of its total potential returns per unit of risk. Monitor Ventures is currently generating about 0.1 per unit of volatility. If you would invest  7.93  in Monitor Ventures on September 4, 2024 and sell it today you would earn a total of  1.07  from holding Monitor Ventures or generate 13.49% return on investment over 90 days.

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

Centaurus Metals Limited  vs.  Monitor Ventures

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 January 2025.

Monitor Ventures

Risk-Adjusted Performance

7 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monitor Ventures are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Monitor Ventures reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Centaurus Metals and Monitor Ventures

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

The idea behind Centaurus Metals Limited and Monitor Ventures 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.