Correlation Between ADRIATIC METALS and Glaston Oyj
Can any of the company-specific risk be diversified away by investing in both ADRIATIC METALS and Glaston Oyj 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 Glaston Oyj 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 Glaston Oyj Abp, you can compare the effects of market volatilities on ADRIATIC METALS and Glaston Oyj 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 Glaston Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADRIATIC METALS and Glaston Oyj.
Diversification Opportunities for ADRIATIC METALS and Glaston Oyj
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ADRIATIC and Glaston is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding ADRIATIC METALS LS 013355 and Glaston Oyj Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glaston Oyj Abp 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 Glaston Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glaston Oyj Abp has no effect on the direction of ADRIATIC METALS i.e., ADRIATIC METALS and Glaston Oyj go up and down completely randomly.
Pair Corralation between ADRIATIC METALS and Glaston Oyj
Assuming the 90 days trading horizon ADRIATIC METALS LS 013355 is expected to generate 1.66 times more return on investment than Glaston Oyj. However, ADRIATIC METALS is 1.66 times more volatile than Glaston Oyj Abp. It trades about 0.05 of its potential returns per unit of risk. Glaston Oyj Abp is currently generating about 0.04 per unit of risk. If you would invest 183.00 in ADRIATIC METALS LS 013355 on September 4, 2024 and sell it today you would earn a total of 59.00 from holding ADRIATIC METALS LS 013355 or generate 32.24% 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. Glaston Oyj Abp
Performance |
| Timeline |
| ADRIATIC METALS LS |
| Glaston Oyj Abp |
ADRIATIC METALS and Glaston Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADRIATIC METALS and Glaston Oyj
The main advantage of trading using opposite ADRIATIC METALS and Glaston Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADRIATIC METALS position performs unexpectedly, Glaston Oyj 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 Glaston Oyj will offset losses from the drop in Glaston Oyj's long position.The idea behind ADRIATIC METALS LS 013355 and Glaston Oyj Abp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Glaston Oyj vs. International Consolidated Airlines | Glaston Oyj vs. RELIANCE STEEL AL | Glaston Oyj vs. ALGOMA STEEL GROUP | Glaston Oyj vs. SOUTHWEST AIRLINES |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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