Correlation Between Adriatic Metals and Air New
Can any of the company-specific risk be diversified away by investing in both Adriatic Metals and Air New 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 Air New 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 Air New Zealand, you can compare the effects of market volatilities on Adriatic Metals and Air New 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 Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adriatic Metals and Air New.
Diversification Opportunities for Adriatic Metals and Air New
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Adriatic and Air is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals Plc and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand 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 Air New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and Air New go up and down completely randomly.
Pair Corralation between Adriatic Metals and Air New
Assuming the 90 days trading horizon Adriatic Metals Plc is expected to generate 2.32 times more return on investment than Air New. However, Adriatic Metals is 2.32 times more volatile than Air New Zealand. It trades about 0.03 of its potential returns per unit of risk. Air New Zealand is currently generating about -0.02 per unit of risk. If you would invest 319.00 in Adriatic Metals Plc on September 14, 2024 and sell it today you would earn a total of 106.00 from holding Adriatic Metals Plc or generate 33.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adriatic Metals Plc vs. Air New Zealand
Performance |
| Timeline |
| Adriatic Metals Plc |
| Air New Zealand |
Adriatic Metals and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adriatic Metals and Air New
The main advantage of trading using opposite Adriatic Metals and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adriatic Metals position performs unexpectedly, Air New 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 Air New will offset losses from the drop in Air New's long position.| Adriatic Metals vs. Northern Star Resources | Adriatic Metals vs. Evolution Mining | Adriatic Metals vs. Bluescope Steel | Adriatic Metals vs. Sandfire Resources NL |
| Air New vs. Ecofibre | Air New vs. iShares Global Healthcare | Air New vs. Adriatic Metals Plc | Air New vs. Australian Dairy Farms |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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