Correlation Between Adriatic Metals and Schweiter Technologies
Can any of the company-specific risk be diversified away by investing in both Adriatic Metals and Schweiter Technologies 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 Schweiter Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adriatic Metals and Schweiter Technologies AG, you can compare the effects of market volatilities on Adriatic Metals and Schweiter Technologies 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 Schweiter Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adriatic Metals and Schweiter Technologies.
Diversification Opportunities for Adriatic Metals and Schweiter Technologies
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Adriatic and Schweiter is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals and Schweiter Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schweiter Technologies 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 are associated (or correlated) with Schweiter Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schweiter Technologies has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and Schweiter Technologies go up and down completely randomly.
Pair Corralation between Adriatic Metals and Schweiter Technologies
Assuming the 90 days trading horizon Adriatic Metals is expected to generate 1.35 times more return on investment than Schweiter Technologies. However, Adriatic Metals is 1.35 times more volatile than Schweiter Technologies AG. It trades about 0.1 of its potential returns per unit of risk. Schweiter Technologies AG is currently generating about -0.04 per unit of risk. If you would invest 19,620 in Adriatic Metals on September 13, 2024 and sell it today you would earn a total of 1,030 from holding Adriatic Metals or generate 5.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adriatic Metals vs. Schweiter Technologies AG
Performance |
| Timeline |
| Adriatic Metals |
| Schweiter Technologies |
Adriatic Metals and Schweiter Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adriatic Metals and Schweiter Technologies
The main advantage of trading using opposite Adriatic Metals and Schweiter Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adriatic Metals position performs unexpectedly, Schweiter Technologies 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 Schweiter Technologies will offset losses from the drop in Schweiter Technologies' long position.| Adriatic Metals vs. Zanaga Iron Ore | Adriatic Metals vs. Cairo Communication SpA | Adriatic Metals vs. Zoom Video Communications | Adriatic Metals vs. Symphony Environmental Technologies |
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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