Correlation Between Adriatic Metals and Associated British
Can any of the company-specific risk be diversified away by investing in both Adriatic Metals and Associated British 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 Associated British into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adriatic Metals and Associated British Foods, you can compare the effects of market volatilities on Adriatic Metals and Associated British 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 Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adriatic Metals and Associated British.
Diversification Opportunities for Adriatic Metals and Associated British
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Adriatic and Associated is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods 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 Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and Associated British go up and down completely randomly.
Pair Corralation between Adriatic Metals and Associated British
Assuming the 90 days trading horizon Adriatic Metals is expected to generate 1.67 times more return on investment than Associated British. However, Adriatic Metals is 1.67 times more volatile than Associated British Foods. It trades about 0.19 of its potential returns per unit of risk. Associated British Foods is currently generating about -0.23 per unit of risk. If you would invest 19,140 in Adriatic Metals on November 7, 2024 and sell it today you would earn a total of 2,060 from holding Adriatic Metals or generate 10.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Adriatic Metals vs. Associated British Foods
Performance |
| Timeline |
| Adriatic Metals |
| Associated British Foods |
Adriatic Metals and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adriatic Metals and Associated British
The main advantage of trading using opposite Adriatic Metals and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adriatic Metals position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.| Adriatic Metals vs. One Media iP | Adriatic Metals vs. Costco Wholesale Corp | Adriatic Metals vs. G5 Entertainment AB | Adriatic Metals vs. Catena Media PLC |
| Associated British vs. Creo Medical Group | Associated British vs. Advanced Medical Solutions | Associated British vs. Solstad Offshore ASA | Associated British vs. Ondine Biomedical |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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