Correlation Between Central Asia and Itaconix Plc

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

Diversification Opportunities for Central Asia and Itaconix Plc

-0.4

Correlation Coefficient

Central Asia  Itaconix Plc

Very good diversification

The 3 months correlation between Central and Itaconix is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Central Asia Metals and Itaconix plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itaconix 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 Itaconix Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itaconix plc has no effect on the direction of Central Asia i.e., Central Asia and Itaconix Plc go up and down completely randomly.

Pair Corralation between Central Asia and Itaconix Plc

Assuming the 90 days trading horizon Central Asia Metals is expected to under-perform the Itaconix Plc. But the stock apears to be less risky and, when comparing its historical volatility, Central Asia Metals is 1.68 times less risky than Itaconix Plc. The stock trades about -0.08 of its potential returns per unit of risk. The Itaconix plc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  10,000  in Itaconix plc on April 22, 2025 and sell it today you would earn a total of  2,850  from holding Itaconix plc or generate 28.5% return on investment over 90 days.

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

Central Asia Metals  vs.  Itaconix 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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Itaconix plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Itaconix plc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Itaconix Plc exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Central Asia and Itaconix Plc

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

The idea behind Central Asia Metals and Itaconix 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.