Correlation Between Centaurus Metals and Blackstone Minerals

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

Diversification Opportunities for Centaurus Metals and Blackstone Minerals

0.18

Correlation Coefficient

Centaurus Metals  Blackstone Minerals

Average diversification

The 3 months correlation between Centaurus and Blackstone is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Centaurus Metals Limited and Blackstone Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Minerals 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 Blackstone Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackstone Minerals has no effect on the direction of Centaurus Metals i.e., Centaurus Metals and Blackstone Minerals go up and down completely randomly.

Pair Corralation between Centaurus Metals and Blackstone Minerals

Assuming the 90 days horizon Centaurus Metals is expected to generate 107.74 times less return on investment than Blackstone Minerals. But when comparing it to its historical volatility, Centaurus Metals Limited is 27.83 times less risky than Blackstone Minerals. It trades about 0.04 of its potential returns per unit of risk. Blackstone Minerals is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Blackstone Minerals on August 31, 2024 and sell it today you would lose (1.67) from holding Blackstone Minerals or give up 55.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Centaurus Metals Limited  vs.  Blackstone Minerals

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 December 2024.

Blackstone Minerals

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackstone Minerals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Blackstone Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Centaurus Metals and Blackstone Minerals

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

The idea behind Centaurus Metals Limited and Blackstone Minerals 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.