Correlation Between Adriatic Metals and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both Adriatic Metals and NMI Holdings 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 Adriatic Metals and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adriatic Metals Plc and NMI Holdings, you can compare the effects of market volatilities on Adriatic Metals and NMI Holdings 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 Adriatic Metals with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adriatic Metals and NMI Holdings.
Diversification Opportunities for Adriatic Metals and NMI Holdings
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Adriatic and NMI is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals Plc and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and Adriatic Metals 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 Adriatic Metals Plc are associated (or correlated) with NMI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMI Holdings has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and NMI Holdings go up and down completely randomly.
Pair Corralation between Adriatic Metals and NMI Holdings
Assuming the 90 days horizon Adriatic Metals Plc is expected to generate 2.53 times more return on investment than NMI Holdings. However, Adriatic Metals is 2.53 times more volatile than NMI Holdings. It trades about 0.04 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.08 per unit of risk. If you would invest 210.00 in Adriatic Metals Plc on August 25, 2024 and sell it today you would earn a total of 42.00 from holding Adriatic Metals Plc or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.26% |
| Values | Daily Returns |
Adriatic Metals Plc vs. NMI Holdings
Performance |
| Timeline |
| Adriatic Metals Plc |
| NMI Holdings |
Adriatic Metals and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adriatic Metals and NMI Holdings
The main advantage of trading using opposite Adriatic Metals and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adriatic Metals position performs unexpectedly, NMI Holdings 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 NMI Holdings will offset losses from the drop in NMI Holdings' long position.| Adriatic Metals vs. Mineral Resources Limited | Adriatic Metals vs. NEXA RESOURCES SA | Adriatic Metals vs. ADRIATIC METALS LS 013355 | Adriatic Metals vs. Superior Plus Corp |
| NMI Holdings vs. Lion One Metals | NMI Holdings vs. Harmony Gold Mining | NMI Holdings vs. OFFICE DEPOT | NMI Holdings vs. JAPAN TOBACCO UNSPADR12 |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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