Correlation Between Adriatic Metals and Huntsman Exploration
Can any of the company-specific risk be diversified away by investing in both Adriatic Metals and Huntsman Exploration 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 Huntsman Exploration 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 Huntsman Exploration, you can compare the effects of market volatilities on Adriatic Metals and Huntsman Exploration 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 Huntsman Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adriatic Metals and Huntsman Exploration.
Diversification Opportunities for Adriatic Metals and Huntsman Exploration
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adriatic and Huntsman is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals PLC and Huntsman Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntsman Exploration 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 Huntsman Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntsman Exploration has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and Huntsman Exploration go up and down completely randomly.
Pair Corralation between Adriatic Metals and Huntsman Exploration
Assuming the 90 days horizon Adriatic Metals PLC is expected to generate 0.23 times more return on investment than Huntsman Exploration. However, Adriatic Metals PLC is 4.44 times less risky than Huntsman Exploration. It trades about -0.06 of its potential returns per unit of risk. Huntsman Exploration is currently generating about -0.22 per unit of risk. If you would invest 275.00 in Adriatic Metals PLC on August 28, 2024 and sell it today you would lose (12.00) from holding Adriatic Metals PLC or give up 4.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adriatic Metals PLC vs. Huntsman Exploration
Performance |
| Timeline |
| Adriatic Metals PLC |
| Huntsman Exploration |
Adriatic Metals and Huntsman Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adriatic Metals and Huntsman Exploration
The main advantage of trading using opposite Adriatic Metals and Huntsman Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adriatic Metals position performs unexpectedly, Huntsman Exploration 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 Huntsman Exploration will offset losses from the drop in Huntsman Exploration's long position.| Adriatic Metals vs. Huntsman Exploration | Adriatic Metals vs. Aurelia Metals Limited | Adriatic Metals vs. American Helium | Adriatic Metals vs. Progressive Planet Solutions |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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