Correlation Between ADRIATIC METALS and BP Plc
Can any of the company-specific risk be diversified away by investing in both ADRIATIC METALS and BP Plc 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 BP Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADRIATIC METALS LS 013355 and BP plc, you can compare the effects of market volatilities on ADRIATIC METALS and BP Plc 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 BP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADRIATIC METALS and BP Plc.
Diversification Opportunities for ADRIATIC METALS and BP Plc
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ADRIATIC and BSU is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding ADRIATIC METALS LS 013355 and BP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP plc 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 LS 013355 are associated (or correlated) with BP Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP plc has no effect on the direction of ADRIATIC METALS i.e., ADRIATIC METALS and BP Plc go up and down completely randomly.
Pair Corralation between ADRIATIC METALS and BP Plc
Assuming the 90 days trading horizon ADRIATIC METALS LS 013355 is expected to generate 2.79 times more return on investment than BP Plc. However, ADRIATIC METALS is 2.79 times more volatile than BP plc. It trades about 0.15 of its potential returns per unit of risk. BP plc is currently generating about -0.08 per unit of risk. If you would invest 171.00 in ADRIATIC METALS LS 013355 on September 2, 2024 and sell it today you would earn a total of 75.00 from holding ADRIATIC METALS LS 013355 or generate 43.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADRIATIC METALS LS 013355 vs. BP plc
Performance |
| Timeline |
| ADRIATIC METALS LS |
| BP plc |
ADRIATIC METALS and BP Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADRIATIC METALS and BP Plc
The main advantage of trading using opposite ADRIATIC METALS and BP Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADRIATIC METALS position performs unexpectedly, BP Plc 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 BP Plc will offset losses from the drop in BP Plc's long position.| ADRIATIC METALS vs. NAKED WINES PLC | ADRIATIC METALS vs. China BlueChemical | ADRIATIC METALS vs. Eastman Chemical | ADRIATIC METALS vs. United Rentals |
| BP Plc vs. Lifeway Foods | BP Plc vs. CN MODERN DAIRY | BP Plc vs. Food Life Companies | BP Plc vs. ADRIATIC METALS LS 013355 |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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