Correlation Between ADRIATIC METALS and Plastic Omnium
Can any of the company-specific risk be diversified away by investing in both ADRIATIC METALS and Plastic Omnium 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 Plastic Omnium 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 Plastic Omnium, you can compare the effects of market volatilities on ADRIATIC METALS and Plastic Omnium 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 Plastic Omnium. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADRIATIC METALS and Plastic Omnium.
Diversification Opportunities for ADRIATIC METALS and Plastic Omnium
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ADRIATIC and Plastic is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding ADRIATIC METALS LS 013355 and Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plastic Omnium 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 Plastic Omnium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plastic Omnium has no effect on the direction of ADRIATIC METALS i.e., ADRIATIC METALS and Plastic Omnium go up and down completely randomly.
Pair Corralation between ADRIATIC METALS and Plastic Omnium
Assuming the 90 days trading horizon ADRIATIC METALS LS 013355 is expected to generate 1.4 times more return on investment than Plastic Omnium. However, ADRIATIC METALS is 1.4 times more volatile than Plastic Omnium. It trades about 0.03 of its potential returns per unit of risk. Plastic Omnium is currently generating about -0.02 per unit of risk. If you would invest 193.00 in ADRIATIC METALS LS 013355 on August 29, 2024 and sell it today you would earn a total of 43.00 from holding ADRIATIC METALS LS 013355 or generate 22.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADRIATIC METALS LS 013355 vs. Plastic Omnium
Performance |
| Timeline |
| ADRIATIC METALS LS |
| Plastic Omnium |
ADRIATIC METALS and Plastic Omnium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADRIATIC METALS and Plastic Omnium
The main advantage of trading using opposite ADRIATIC METALS and Plastic Omnium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADRIATIC METALS position performs unexpectedly, Plastic Omnium 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 Plastic Omnium will offset losses from the drop in Plastic Omnium's long position.| ADRIATIC METALS vs. AEGEAN AIRLINES | ADRIATIC METALS vs. Costco Wholesale Corp | ADRIATIC METALS vs. Ross Stores | ADRIATIC METALS vs. Retail Estates NV |
| Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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