Correlation Between ADRIATIC METALS and HEXAGON AB

Can any of the company-specific risk be diversified away by investing in both ADRIATIC METALS and HEXAGON AB 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 HEXAGON AB 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 HEXAGON AB ADR1, you can compare the effects of market volatilities on ADRIATIC METALS and HEXAGON AB 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 HEXAGON AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADRIATIC METALS and HEXAGON AB.

Diversification Opportunities for ADRIATIC METALS and HEXAGON AB

-0.37

Correlation Coefficient

ADRIATIC METALS  HEXAGON AB

Very good diversification

The 3 months correlation between ADRIATIC and HEXAGON is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding ADRIATIC METALS LS 013355 and HEXAGON AB ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEXAGON AB ADR1 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 HEXAGON AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEXAGON AB ADR1 has no effect on the direction of ADRIATIC METALS i.e., ADRIATIC METALS and HEXAGON AB go up and down completely randomly.

Pair Corralation between ADRIATIC METALS and HEXAGON AB

Assuming the 90 days trading horizon ADRIATIC METALS LS 013355 is expected to generate 1.5 times more return on investment than HEXAGON AB. However, ADRIATIC METALS is 1.5 times more volatile than HEXAGON AB ADR1. It trades about 0.08 of its potential returns per unit of risk. HEXAGON AB ADR1 is currently generating about 0.05 per unit of risk. If you would invest  212.00  in ADRIATIC METALS LS 013355 on September 15, 2024 and sell it today you would earn a total of  32.00  from holding ADRIATIC METALS LS 013355 or generate 15.09% return on investment over 90 days.

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

ADRIATIC METALS LS 013355  vs.  HEXAGON AB ADR1

ADRIATIC METALS LS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ADRIATIC METALS LS 013355 are ranked lower than 6 (%) 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.

HEXAGON AB ADR1

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HEXAGON AB ADR1 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, HEXAGON AB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ADRIATIC METALS and HEXAGON AB

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

The idea behind ADRIATIC METALS LS 013355 and HEXAGON AB ADR1 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.