Correlation Between ADRIATIC METALS and ABERFORTH SMCOS

Can any of the company-specific risk be diversified away by investing in both ADRIATIC METALS and ABERFORTH SMCOS 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 ABERFORTH SMCOS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ADRIATIC METALS LS 013355 and ABERFORTH SMCOS TRLS 01, you can compare the effects of market volatilities on ADRIATIC METALS and ABERFORTH SMCOS 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 ABERFORTH SMCOS. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADRIATIC METALS and ABERFORTH SMCOS.

Diversification Opportunities for ADRIATIC METALS and ABERFORTH SMCOS

-0.56

Correlation Coefficient

ADRIATIC METALS  ABERFORTH SMCOS

Excellent diversification

The 3 months correlation between ADRIATIC and ABERFORTH is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding ADRIATIC METALS LS 013355 and ABERFORTH SMCOS TRLS 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABERFORTH SMCOS TRLS 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 LS 013355 are associated (or correlated) with ABERFORTH SMCOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABERFORTH SMCOS TRLS has no effect on the direction of ADRIATIC METALS i.e., ADRIATIC METALS and ABERFORTH SMCOS go up and down completely randomly.

Pair Corralation between ADRIATIC METALS and ABERFORTH SMCOS

Assuming the 90 days trading horizon ADRIATIC METALS LS 013355 is expected to generate 3.95 times more return on investment than ABERFORTH SMCOS. However, ADRIATIC METALS is 3.95 times more volatile than ABERFORTH SMCOS TRLS 01. It trades about 0.18 of its potential returns per unit of risk. ABERFORTH SMCOS TRLS 01 is currently generating about -0.04 per unit of risk. If you would invest  157.00  in ADRIATIC METALS LS 013355 on September 5, 2024 and sell it today you would earn a total of  85.00  from holding ADRIATIC METALS LS 013355 or generate 54.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ADRIATIC METALS LS 013355  vs.  ABERFORTH SMCOS TRLS 01

ADRIATIC METALS LS

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ADRIATIC METALS LS 013355 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ADRIATIC METALS reported solid returns over the last few months and may actually be approaching a breakup point.

ABERFORTH SMCOS TRLS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABERFORTH SMCOS TRLS 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ABERFORTH SMCOS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ADRIATIC METALS and ABERFORTH SMCOS

The main advantage of trading using opposite ADRIATIC METALS and ABERFORTH SMCOS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADRIATIC METALS position performs unexpectedly, ABERFORTH SMCOS 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 ABERFORTH SMCOS will offset losses from the drop in ABERFORTH SMCOS's long position.

The idea behind ADRIATIC METALS LS 013355 and ABERFORTH SMCOS TRLS 01 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.