Correlation Between ARDAGH METAL and ADHI KARYA

Can any of the company-specific risk be diversified away by investing in both ARDAGH METAL and ADHI KARYA 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 ARDAGH METAL and ADHI KARYA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ARDAGH METAL PACDL 0001 and ADHI KARYA, you can compare the effects of market volatilities on ARDAGH METAL and ADHI KARYA 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 ARDAGH METAL with a short position of ADHI KARYA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARDAGH METAL and ADHI KARYA.

Diversification Opportunities for ARDAGH METAL and ADHI KARYA

0.09

Correlation Coefficient

ARDAGH METAL  ADHI KARYA

Significant diversification

The 3 months correlation between ARDAGH and ADHI is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding ARDAGH METAL PACDL 0001 and ADHI KARYA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADHI KARYA and ARDAGH METAL 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 ARDAGH METAL PACDL 0001 are associated (or correlated) with ADHI KARYA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADHI KARYA has no effect on the direction of ARDAGH METAL i.e., ARDAGH METAL and ADHI KARYA go up and down completely randomly.

Pair Corralation between ARDAGH METAL and ADHI KARYA

Assuming the 90 days horizon ARDAGH METAL is expected to generate 2.13 times less return on investment than ADHI KARYA. But when comparing it to its historical volatility, ARDAGH METAL PACDL 0001 is 2.15 times less risky than ADHI KARYA. It trades about 0.02 of its potential returns per unit of risk. ADHI KARYA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1.50  in ADHI KARYA on September 13, 2024 and sell it today you would lose (0.35) from holding ADHI KARYA or give up 23.33% of portfolio value over 90 days.

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

ARDAGH METAL PACDL 0001  vs.  ADHI KARYA

ARDAGH METAL PACDL

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ARDAGH METAL PACDL 0001 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ARDAGH METAL reported solid returns over the last few months and may actually be approaching a breakup point.

ADHI KARYA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ADHI KARYA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, ADHI KARYA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ARDAGH METAL and ADHI KARYA

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

The idea behind ARDAGH METAL PACDL 0001 and ADHI KARYA 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.