Correlation Between Central Asia and Capital Metals

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

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

Diversification Opportunities for Central Asia and Capital Metals

0.24

Correlation Coefficient

Central Asia  Capital Metals

Modest diversification

The 3 months correlation between Central and Capital is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Central Asia Metals and Capital Metals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Metals PLC and Central Asia 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 Central Asia Metals are associated (or correlated) with Capital Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Metals PLC has no effect on the direction of Central Asia i.e., Central Asia and Capital Metals go up and down completely randomly.

Pair Corralation between Central Asia and Capital Metals

Assuming the 90 days trading horizon Central Asia is expected to generate 8.92 times less return on investment than Capital Metals. But when comparing it to its historical volatility, Central Asia Metals is 2.1 times less risky than Capital Metals. It trades about 0.02 of its potential returns per unit of risk. Capital Metals PLC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  270.00  in Capital Metals PLC on April 24, 2025 and sell it today you would earn a total of  35.00  from holding Capital Metals PLC or generate 12.96% return on investment over 90 days.

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

Central Asia Metals  vs.  Capital Metals PLC

Central Asia Metals

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Central Asia Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Central Asia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Capital Metals PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Metals PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Capital Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Central Asia and Capital Metals

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

The idea behind Central Asia Metals and Capital Metals PLC 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.