Correlation Between OM Holdings and Centaurus Metals

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

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

Diversification Opportunities for OM Holdings and Centaurus Metals

0.38

Correlation Coefficient

OM Holdings  Centaurus Metals

Weak diversification

The 3 months correlation between OMHLF and Centaurus is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding OM Holdings Limited and Centaurus Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaurus Metals and OM Holdings 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 OM Holdings Limited are associated (or correlated) with Centaurus Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaurus Metals has no effect on the direction of OM Holdings i.e., OM Holdings and Centaurus Metals go up and down completely randomly.

Pair Corralation between OM Holdings and Centaurus Metals

If you would invest  23.00  in OM Holdings Limited on September 22, 2024 and sell it today you would earn a total of  0.00  from holding OM Holdings Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

OM Holdings Limited  vs.  Centaurus Metals Limited

OM Holdings Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OM Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Centaurus Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centaurus Metals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with OM Holdings and Centaurus Metals

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

The idea behind OM Holdings Limited and Centaurus Metals Limited 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.