Correlation Between Adriatic Metals and Cruz Cobalt
Can any of the company-specific risk be diversified away by investing in both Adriatic Metals and Cruz Cobalt 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 Cruz Cobalt 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 Cruz Cobalt Corp, you can compare the effects of market volatilities on Adriatic Metals and Cruz Cobalt 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 Cruz Cobalt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adriatic Metals and Cruz Cobalt.
Diversification Opportunities for Adriatic Metals and Cruz Cobalt
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Adriatic and Cruz is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals PLC and Cruz Cobalt Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cruz Cobalt Corp 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 Cruz Cobalt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cruz Cobalt Corp has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and Cruz Cobalt go up and down completely randomly.
Pair Corralation between Adriatic Metals and Cruz Cobalt
Assuming the 90 days horizon Adriatic Metals is expected to generate 4.74 times less return on investment than Cruz Cobalt. But when comparing it to its historical volatility, Adriatic Metals PLC is 2.61 times less risky than Cruz Cobalt. It trades about 0.02 of its potential returns per unit of risk. Cruz Cobalt Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2.92 in Cruz Cobalt Corp on September 3, 2024 and sell it today you would lose (0.17) from holding Cruz Cobalt Corp or give up 5.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Adriatic Metals PLC vs. Cruz Cobalt Corp
Performance |
| Timeline |
| Adriatic Metals PLC |
| Cruz Cobalt Corp |
Adriatic Metals and Cruz Cobalt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adriatic Metals and Cruz Cobalt
The main advantage of trading using opposite Adriatic Metals and Cruz Cobalt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adriatic Metals position performs unexpectedly, Cruz Cobalt 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 Cruz Cobalt will offset losses from the drop in Cruz Cobalt'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 |
| Cruz Cobalt vs. Qubec Nickel Corp | Cruz Cobalt vs. IGO Limited | Cruz Cobalt vs. Avarone Metals | Cruz Cobalt vs. Adriatic Metals PLC |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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