Correlation Between Adriatic Metals and Credit Clear

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

Diversification Opportunities for Adriatic Metals and Credit Clear

0.38

Correlation Coefficient

Adriatic Metals  Credit Clear

Weak diversification

The 3 months correlation between Adriatic and Credit is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals Plc and Credit Clear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Clear 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 Credit Clear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Clear has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and Credit Clear go up and down completely randomly.

Pair Corralation between Adriatic Metals and Credit Clear

Assuming the 90 days trading horizon Adriatic Metals Plc is expected to generate 0.82 times more return on investment than Credit Clear. However, Adriatic Metals Plc is 1.22 times less risky than Credit Clear. It trades about 0.1 of its potential returns per unit of risk. Credit Clear is currently generating about 0.06 per unit of risk. If you would invest  345.00  in Adriatic Metals Plc on September 25, 2024 and sell it today you would earn a total of  53.00  from holding Adriatic Metals Plc or generate 15.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Adriatic Metals Plc  vs.  Credit Clear

Adriatic Metals Plc

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Adriatic Metals Plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Adriatic Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Credit Clear

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Clear are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Credit Clear may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Adriatic Metals and Credit Clear

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

The idea behind Adriatic Metals Plc and Credit Clear 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.