Correlation Between Adriatic Metals and STRAITS TRADG
Can any of the company-specific risk be diversified away by investing in both Adriatic Metals and STRAITS TRADG 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 STRAITS TRADG 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 STRAITS TRADG SD, you can compare the effects of market volatilities on Adriatic Metals and STRAITS TRADG 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 STRAITS TRADG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adriatic Metals and STRAITS TRADG.
Diversification Opportunities for Adriatic Metals and STRAITS TRADG
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adriatic and STRAITS is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals Plc and STRAITS TRADG SD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAITS TRADG SD 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 STRAITS TRADG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRAITS TRADG SD has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and STRAITS TRADG go up and down completely randomly.
Pair Corralation between Adriatic Metals and STRAITS TRADG
Assuming the 90 days horizon Adriatic Metals Plc is expected to generate 2.21 times more return on investment than STRAITS TRADG. However, Adriatic Metals is 2.21 times more volatile than STRAITS TRADG SD. It trades about 0.05 of its potential returns per unit of risk. STRAITS TRADG SD is currently generating about -0.02 per unit of risk. If you would invest 191.00 in Adriatic Metals Plc on August 24, 2024 and sell it today you would earn a total of 61.00 from holding Adriatic Metals Plc or generate 31.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Adriatic Metals Plc vs. STRAITS TRADG SD
Performance |
| Timeline |
| Adriatic Metals Plc |
| STRAITS TRADG SD |
Adriatic Metals and STRAITS TRADG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adriatic Metals and STRAITS TRADG
The main advantage of trading using opposite Adriatic Metals and STRAITS TRADG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adriatic Metals position performs unexpectedly, STRAITS TRADG 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 STRAITS TRADG will offset losses from the drop in STRAITS TRADG's 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 |
| STRAITS TRADG vs. Lion One Metals | STRAITS TRADG vs. AXWAY SOFTWARE EO | STRAITS TRADG vs. CarsalesCom | STRAITS TRADG vs. GRUPO CARSO A1 |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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