Correlation Between Central Asia and Hardide PLC

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

Diversification Opportunities for Central Asia and Hardide PLC

0.29

Correlation Coefficient

Central Asia  Hardide PLC

Modest diversification

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

Pair Corralation between Central Asia and Hardide PLC

Assuming the 90 days trading horizon Central Asia Metals is expected to under-perform the Hardide PLC. But the stock apears to be less risky and, when comparing its historical volatility, Central Asia Metals is 1.67 times less risky than Hardide PLC. The stock trades about -0.01 of its potential returns per unit of risk. The Hardide PLC is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  575.00  in Hardide PLC on April 24, 2025 and sell it today you would earn a total of  225.00  from holding Hardide PLC or generate 39.13% 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.  Hardide PLC

Central Asia Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Central Asia Metals has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Hardide PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hardide PLC are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Hardide PLC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Central Asia and Hardide PLC

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

The idea behind Central Asia Metals and Hardide 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.