Correlation Between Central Asia and Microlise Group

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

Diversification Opportunities for Central Asia and Microlise Group

-0.51

Correlation Coefficient

Central Asia  Microlise Group

Excellent diversification

The 3 months correlation between Central and Microlise is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Central Asia Metals and Microlise Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microlise Group 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 Microlise Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microlise Group PLC has no effect on the direction of Central Asia i.e., Central Asia and Microlise Group go up and down completely randomly.

Pair Corralation between Central Asia and Microlise Group

Assuming the 90 days trading horizon Central Asia Metals is expected to under-perform the Microlise Group. But the stock apears to be less risky and, when comparing its historical volatility, Central Asia Metals is 1.06 times less risky than Microlise Group. The stock trades about -0.01 of its potential returns per unit of risk. The Microlise Group PLC is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  9,783  in Microlise Group PLC on April 24, 2025 and sell it today you would earn a total of  3,967  from holding Microlise Group PLC or generate 40.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Central Asia Metals  vs.  Microlise Group 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.

Microlise Group PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Microlise Group PLC are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Microlise Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Central Asia and Microlise Group

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

The idea behind Central Asia Metals and Microlise Group 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.