Correlation Between Adriatic Metals and AMP
Can any of the company-specific risk be diversified away by investing in both Adriatic Metals and AMP 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 AMP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adriatic Metals Plc and AMP, you can compare the effects of market volatilities on Adriatic Metals and AMP 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 AMP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adriatic Metals and AMP.
Diversification Opportunities for Adriatic Metals and AMP
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adriatic and AMP is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals Plc and AMP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMP 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 Plc are associated (or correlated) with AMP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMP has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and AMP go up and down completely randomly.
Pair Corralation between Adriatic Metals and AMP
Assuming the 90 days trading horizon Adriatic Metals Plc is expected to generate 1.94 times more return on investment than AMP. However, Adriatic Metals is 1.94 times more volatile than AMP. It trades about 0.12 of its potential returns per unit of risk. AMP is currently generating about 0.18 per unit of risk. If you would invest 393.00 in Adriatic Metals Plc on September 15, 2024 and sell it today you would earn a total of 25.00 from holding Adriatic Metals Plc or generate 6.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Adriatic Metals Plc vs. AMP
Performance |
Timeline |
Adriatic Metals Plc |
AMP |
Adriatic Metals and AMP Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Adriatic Metals and AMP
The main advantage of trading using opposite Adriatic Metals and AMP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adriatic Metals position performs unexpectedly, AMP 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 AMP will offset losses from the drop in AMP's long position.Adriatic Metals vs. BKI Investment | Adriatic Metals vs. Zoom2u Technologies | Adriatic Metals vs. Argo Investments | Adriatic Metals vs. Hansen Technologies |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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