Correlation Between ADRIATIC METALS and Sims Metal
Can any of the company-specific risk be diversified away by investing in both ADRIATIC METALS and Sims Metal 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 Sims Metal 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 Sims Metal Management, you can compare the effects of market volatilities on ADRIATIC METALS and Sims Metal 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 Sims Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADRIATIC METALS and Sims Metal.
Diversification Opportunities for ADRIATIC METALS and Sims Metal
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ADRIATIC and Sims is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding ADRIATIC METALS LS 013355 and Sims Metal Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sims Metal Management 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 Sims Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sims Metal Management has no effect on the direction of ADRIATIC METALS i.e., ADRIATIC METALS and Sims Metal go up and down completely randomly.
Pair Corralation between ADRIATIC METALS and Sims Metal
Assuming the 90 days trading horizon ADRIATIC METALS LS 013355 is expected to under-perform the Sims Metal. In addition to that, ADRIATIC METALS is 1.31 times more volatile than Sims Metal Management. It trades about -0.08 of its total potential returns per unit of risk. Sims Metal Management is currently generating about 0.06 per unit of volatility. If you would invest 770.00 in Sims Metal Management on August 31, 2024 and sell it today you would earn a total of 20.00 from holding Sims Metal Management or generate 2.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADRIATIC METALS LS 013355 vs. Sims Metal Management
Performance |
| Timeline |
| ADRIATIC METALS LS |
| Sims Metal Management |
ADRIATIC METALS and Sims Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADRIATIC METALS and Sims Metal
The main advantage of trading using opposite ADRIATIC METALS and Sims Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADRIATIC METALS position performs unexpectedly, Sims Metal 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 Sims Metal will offset losses from the drop in Sims Metal's long position.| ADRIATIC METALS vs. Rio Tinto Group | ADRIATIC METALS vs. Liontown Resources Limited | ADRIATIC METALS vs. American Lithium Corp |
| Sims Metal vs. SALESFORCE INC CDR | Sims Metal vs. CARSALESCOM | Sims Metal vs. ADRIATIC METALS LS 013355 | Sims Metal vs. AAC TECHNOLOGHLDGADR |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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