Correlation Between Auto Trader and Adriatic Metals
Can any of the company-specific risk be diversified away by investing in both Auto Trader 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 Auto Trader and Adriatic Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auto Trader Group and Adriatic Metals, you can compare the effects of market volatilities on Auto Trader 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 Auto Trader with a short position of Adriatic Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and Adriatic Metals.
Diversification Opportunities for Auto Trader and Adriatic Metals
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Auto and Adriatic is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and Adriatic Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adriatic Metals and Auto Trader 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 Auto Trader Group 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 has no effect on the direction of Auto Trader i.e., Auto Trader and Adriatic Metals go up and down completely randomly.
Pair Corralation between Auto Trader and Adriatic Metals
Assuming the 90 days trading horizon Auto Trader Group is expected to under-perform the Adriatic Metals. But the stock apears to be less risky and, when comparing its historical volatility, Auto Trader Group is 2.41 times less risky than Adriatic Metals. The stock trades about -0.21 of its potential returns per unit of risk. The Adriatic Metals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 21,150 in Adriatic Metals on October 30, 2024 and sell it today you would earn a total of 150.00 from holding Adriatic Metals or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auto Trader Group vs. Adriatic Metals
Performance |
| Timeline |
| Auto Trader Group |
| Adriatic Metals |
Auto Trader and Adriatic Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and Adriatic Metals
The main advantage of trading using opposite Auto Trader and Adriatic Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader 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.| Auto Trader vs. Capital Metals PLC | Auto Trader vs. Manulife Financial Corp | Auto Trader vs. TBC Bank Group | Auto Trader vs. URU Metals |
| Adriatic Metals vs. Gamma Communications PLC | Adriatic Metals vs. Aeorema Communications Plc | Adriatic Metals vs. iShares Physical Silver | Adriatic Metals vs. Verizon Communications |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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