Correlation Between Meteoric Resources and Centrotec

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

By analyzing existing cross correlation between Meteoric Resources NL and Centrotec SE, you can compare the effects of market volatilities on Meteoric Resources and Centrotec 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 Meteoric Resources with a short position of Centrotec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meteoric Resources and Centrotec.

Diversification Opportunities for Meteoric Resources and Centrotec

-0.33

Correlation Coefficient

Meteoric Resources  Centrotec

Very good diversification

The 3 months correlation between Meteoric and Centrotec is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Meteoric Resources NL and Centrotec SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrotec SE and Meteoric Resources 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 Meteoric Resources NL are associated (or correlated) with Centrotec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrotec SE has no effect on the direction of Meteoric Resources i.e., Meteoric Resources and Centrotec go up and down completely randomly.

Pair Corralation between Meteoric Resources and Centrotec

Assuming the 90 days horizon Meteoric Resources NL is expected to generate 13.12 times more return on investment than Centrotec. However, Meteoric Resources is 13.12 times more volatile than Centrotec SE. It trades about 0.04 of its potential returns per unit of risk. Centrotec SE is currently generating about -0.01 per unit of risk. If you would invest  8.40  in Meteoric Resources NL on September 22, 2024 and sell it today you would lose (3.45) from holding Meteoric Resources NL or give up 41.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.24%
Values	Daily Returns

Meteoric Resources NL  vs.  Centrotec SE

Meteoric Resources

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Meteoric Resources NL are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Meteoric Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Centrotec SE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Centrotec SE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Centrotec may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Meteoric Resources and Centrotec

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

The idea behind Meteoric Resources NL and Centrotec SE 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.