Correlation Between PureTech Health and Central Asia
Can any of the company-specific risk be diversified away by investing in both PureTech Health and Central Asia 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 PureTech Health and Central Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PureTech Health plc and Central Asia Metals, you can compare the effects of market volatilities on PureTech Health and Central Asia 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 PureTech Health with a short position of Central Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of PureTech Health and Central Asia.
Diversification Opportunities for PureTech Health and Central Asia
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PureTech and Central is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding PureTech Health plc and Central Asia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Asia Metals and PureTech Health 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 PureTech Health plc are associated (or correlated) with Central Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Asia Metals has no effect on the direction of PureTech Health i.e., PureTech Health and Central Asia go up and down completely randomly.
Pair Corralation between PureTech Health and Central Asia
Assuming the 90 days trading horizon PureTech Health plc is expected to generate 1.07 times more return on investment than Central Asia. However, PureTech Health is 1.07 times more volatile than Central Asia Metals. It trades about 0.1 of its potential returns per unit of risk. Central Asia Metals is currently generating about -0.03 per unit of risk. If you would invest 12,400 in PureTech Health plc on April 23, 2025 and sell it today you would earn a total of 1,420 from holding PureTech Health plc or generate 11.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
PureTech Health plc vs. Central Asia Metals
Performance |
Timeline |
PureTech Health plc |
Central Asia Metals |
PureTech Health and Central Asia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PureTech Health and Central Asia
The main advantage of trading using opposite PureTech Health and Central Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PureTech Health position performs unexpectedly, Central Asia 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 Central Asia will offset losses from the drop in Central Asia's long position.PureTech Health vs. Flutter Entertainment PLC | PureTech Health vs. Camellia Plc | PureTech Health vs. Ferguson Plc | PureTech Health vs. Marwyn Value Investors |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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