Correlation Between Centennial Resource and C Mer

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Can any of the company-specific risk be diversified away by investing in both Centennial Resource and C Mer 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 Centennial Resource and C Mer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centennial Resource Development and C Mer Industries, you can compare the effects of market volatilities on Centennial Resource and C Mer 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 Centennial Resource with a short position of C Mer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centennial Resource and C Mer.

Diversification Opportunities for Centennial Resource and C Mer

0.16
  Correlation Coefficient

Average diversification

The 3 months correlation between Centennial and CMER is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Centennial Resource Developmen and C Mer Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C Mer Industries and Centennial Resource 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 Centennial Resource Development are associated (or correlated) with C Mer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C Mer Industries has no effect on the direction of Centennial Resource i.e., Centennial Resource and C Mer go up and down completely randomly.

Pair Corralation between Centennial Resource and C Mer

If you would invest  135,700  in C Mer Industries on December 29, 2023 and sell it today you would earn a total of  1,300  from holding C Mer Industries or generate 0.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy5.88%
ValuesDaily Returns

Centennial Resource Developmen  vs.  C Mer Industries

 Performance 
       Timeline  
Centennial Resource 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Centennial Resource Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Centennial Resource is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
C Mer Industries 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in C Mer Industries are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, C Mer sustained solid returns over the last few months and may actually be approaching a breakup point.

Centennial Resource and C Mer Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Centennial Resource and C Mer

The main advantage of trading using opposite Centennial Resource and C Mer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centennial Resource position performs unexpectedly, C Mer 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 C Mer will offset losses from the drop in C Mer's long position.
The idea behind Centennial Resource Development and C Mer Industries 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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