Correlation Between Adriatic Metals and CAR GROUP
Can any of the company-specific risk be diversified away by investing in both Adriatic Metals and CAR GROUP 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 CAR GROUP 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 CAR GROUP LIMITED, you can compare the effects of market volatilities on Adriatic Metals and CAR GROUP 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 CAR GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adriatic Metals and CAR GROUP.
Diversification Opportunities for Adriatic Metals and CAR GROUP
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Adriatic and CAR is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals Plc and CAR GROUP LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAR GROUP LIMITED 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 CAR GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAR GROUP LIMITED has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and CAR GROUP go up and down completely randomly.
Pair Corralation between Adriatic Metals and CAR GROUP
Assuming the 90 days trading horizon Adriatic Metals Plc is expected to under-perform the CAR GROUP. In addition to that, Adriatic Metals is 2.2 times more volatile than CAR GROUP LIMITED. It trades about -0.03 of its total potential returns per unit of risk. CAR GROUP LIMITED is currently generating about 0.33 per unit of volatility. If you would invest 3,778 in CAR GROUP LIMITED on September 1, 2024 and sell it today you would earn a total of 372.00 from holding CAR GROUP LIMITED or generate 9.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Adriatic Metals Plc vs. CAR GROUP LIMITED
Performance |
| Timeline |
| Adriatic Metals Plc |
| CAR GROUP LIMITED |
Adriatic Metals and CAR GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adriatic Metals and CAR GROUP
The main advantage of trading using opposite Adriatic Metals and CAR GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adriatic Metals position performs unexpectedly, CAR GROUP 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 CAR GROUP will offset losses from the drop in CAR GROUP's long position.| Adriatic Metals vs. Bailador Technology Invest | Adriatic Metals vs. Auctus Alternative Investments | Adriatic Metals vs. Diversified United Investment | Adriatic Metals vs. Pinnacle Investment Management |
| CAR GROUP vs. Westpac Banking | CAR GROUP vs. iShares Global Healthcare | CAR GROUP vs. Australian Dairy Farms | CAR GROUP vs. Adriatic Metals Plc |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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