Correlation Between Macmahon Holdings and Adriatic Metals
Can any of the company-specific risk be diversified away by investing in both Macmahon Holdings 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 Macmahon Holdings and Adriatic Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macmahon Holdings Limited and Adriatic Metals PLC, you can compare the effects of market volatilities on Macmahon Holdings 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 Macmahon Holdings with a short position of Adriatic Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macmahon Holdings and Adriatic Metals.
Diversification Opportunities for Macmahon Holdings and Adriatic Metals
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Macmahon and Adriatic is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Macmahon Holdings Limited 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 Macmahon Holdings 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 Macmahon Holdings Limited 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 Macmahon Holdings i.e., Macmahon Holdings and Adriatic Metals go up and down completely randomly.
Pair Corralation between Macmahon Holdings and Adriatic Metals
Assuming the 90 days horizon Macmahon Holdings Limited is expected to generate 1.15 times more return on investment than Adriatic Metals. However, Macmahon Holdings is 1.15 times more volatile than Adriatic Metals PLC. It trades about 0.14 of its potential returns per unit of risk. Adriatic Metals PLC is currently generating about 0.02 per unit of risk. If you would invest 9.19 in Macmahon Holdings Limited on September 12, 2024 and sell it today you would earn a total of 15.81 from holding Macmahon Holdings Limited or generate 172.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 64.24% |
| Values | Daily Returns |
Macmahon Holdings Limited vs. Adriatic Metals PLC
Performance |
| Timeline |
| Macmahon Holdings |
| Adriatic Metals PLC |
Macmahon Holdings and Adriatic Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macmahon Holdings and Adriatic Metals
The main advantage of trading using opposite Macmahon Holdings and Adriatic Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macmahon Holdings 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.| Macmahon Holdings vs. Advantage Solutions | Macmahon Holdings vs. Atlas Corp | Macmahon Holdings vs. PureCycle Technologies | Macmahon Holdings vs. WM Technology |
| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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