Correlation Between Adriatic Metals and Golden Metal
Can any of the company-specific risk be diversified away by investing in both Adriatic Metals and Golden Metal 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 Golden Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adriatic Metals and Golden Metal Resources, you can compare the effects of market volatilities on Adriatic Metals and Golden Metal 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 Golden Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adriatic Metals and Golden Metal.
Diversification Opportunities for Adriatic Metals and Golden Metal
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Adriatic and Golden is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals and Golden Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Metal 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 are associated (or correlated) with Golden Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Metal Resources has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and Golden Metal go up and down completely randomly.
Pair Corralation between Adriatic Metals and Golden Metal
Assuming the 90 days trading horizon Adriatic Metals is expected to generate 0.72 times more return on investment than Golden Metal. However, Adriatic Metals is 1.39 times less risky than Golden Metal. It trades about 0.17 of its potential returns per unit of risk. Golden Metal Resources is currently generating about -0.01 per unit of risk. If you would invest 15,220 in Adriatic Metals on August 31, 2024 and sell it today you would earn a total of 5,580 from holding Adriatic Metals or generate 36.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adriatic Metals vs. Golden Metal Resources
Performance |
| Timeline |
| Adriatic Metals |
| Golden Metal Resources |
Adriatic Metals and Golden Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adriatic Metals and Golden Metal
The main advantage of trading using opposite Adriatic Metals and Golden Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adriatic Metals position performs unexpectedly, Golden Metal 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 Golden Metal will offset losses from the drop in Golden Metal's long position.| Adriatic Metals vs. Cairo Communication SpA | Adriatic Metals vs. Sovereign Metals | Adriatic Metals vs. United Internet AG | Adriatic Metals vs. Future Metals NL |
| Golden Metal vs. Bankers Investment Trust | Golden Metal vs. Oakley Capital Investments | Golden Metal vs. Federal Realty Investment | Golden Metal vs. New Residential Investment |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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