Correlation Between Adriatic Metals and Summit Resources
Can any of the company-specific risk be diversified away by investing in both Adriatic Metals and Summit Resources 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 Summit Resources 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 Summit Resources Limited, you can compare the effects of market volatilities on Adriatic Metals and Summit Resources 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 Summit Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adriatic Metals and Summit Resources.
Diversification Opportunities for Adriatic Metals and Summit Resources
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Adriatic and Summit is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals Plc and Summit Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Resources 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 Summit Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Resources has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and Summit Resources go up and down completely randomly.
Pair Corralation between Adriatic Metals and Summit Resources
Assuming the 90 days trading horizon Adriatic Metals is expected to generate 32.95 times less return on investment than Summit Resources. But when comparing it to its historical volatility, Adriatic Metals Plc is 9.63 times less risky than Summit Resources. It trades about 0.02 of its potential returns per unit of risk. Summit Resources Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.40 in Summit Resources Limited on August 30, 2024 and sell it today you would lose (0.10) from holding Summit Resources Limited or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Adriatic Metals Plc vs. Summit Resources Limited
Performance |
| Timeline |
| Adriatic Metals Plc |
| Summit Resources |
Adriatic Metals and Summit Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adriatic Metals and Summit Resources
The main advantage of trading using opposite Adriatic Metals and Summit Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adriatic Metals position performs unexpectedly, Summit Resources 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 Summit Resources will offset losses from the drop in Summit Resources' long position.| Adriatic Metals vs. Charter Hall Education | Adriatic Metals vs. Carlton Investments | Adriatic Metals vs. Sandon Capital Investments | Adriatic Metals vs. Janison Education Group |
| Summit Resources vs. Talisman Mining | Summit Resources vs. Hotel Property Investments | Summit Resources vs. Metro Mining | Summit Resources vs. MFF Capital Investments |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| CEOs Directory Screen CEOs from public companies around the world |