Correlation Between Arafura Resources and Adriatic Metals
Can any of the company-specific risk be diversified away by investing in both Arafura Resources and Adriatic Metals 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 Arafura Resources and Adriatic Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arafura Resources and Adriatic Metals Plc, you can compare the effects of market volatilities on Arafura Resources and Adriatic Metals 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 Arafura Resources with a short position of Adriatic Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arafura Resources and Adriatic Metals.
Diversification Opportunities for Arafura Resources and Adriatic Metals
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arafura and Adriatic is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Arafura Resources and Adriatic Metals Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adriatic Metals Plc and Arafura Resources 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 Arafura Resources are associated (or correlated) with Adriatic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adriatic Metals Plc has no effect on the direction of Arafura Resources i.e., Arafura Resources and Adriatic Metals go up and down completely randomly.
Pair Corralation between Arafura Resources and Adriatic Metals
Assuming the 90 days horizon Arafura Resources is expected to under-perform the Adriatic Metals. In addition to that, Arafura Resources is 1.87 times more volatile than Adriatic Metals Plc. It trades about -0.03 of its total potential returns per unit of risk. Adriatic Metals Plc is currently generating about 0.07 per unit of volatility. If you would invest 246.00 in Adriatic Metals Plc on August 29, 2024 and sell it today you would earn a total of 19.00 from holding Adriatic Metals Plc or generate 7.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Arafura Resources vs. Adriatic Metals Plc
Performance |
| Timeline |
| Arafura Resources |
| Adriatic Metals Plc |
Arafura Resources and Adriatic Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arafura Resources and Adriatic Metals
The main advantage of trading using opposite Arafura Resources and Adriatic Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arafura Resources position performs unexpectedly, Adriatic Metals 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 Adriatic Metals will offset losses from the drop in Adriatic Metals' long position.| Arafura Resources vs. Texas Rare Earth | Arafura Resources vs. Lynas Rare Earths | Arafura Resources vs. Ucore Rare Metals | Arafura Resources vs. Aurelia Metals Limited |
| Adriatic Metals vs. Avarone Metals | Adriatic Metals vs. Huntsman Exploration | Adriatic Metals vs. Aurelia Metals Limited | Adriatic Metals vs. Almonty Industries |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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