Correlation Between Almonty Industries and Adriatic Metals

Can any of the company-specific risk be diversified away by investing in both Almonty Industries and Adriatic Metals 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 Almonty Industries and Adriatic Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Almonty Industries and Adriatic Metals Plc, you can compare the effects of market volatilities on Almonty Industries and Adriatic Metals 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 Almonty Industries with a short position of Adriatic Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Almonty Industries and Adriatic Metals.

Diversification Opportunities for Almonty Industries and Adriatic Metals

0.43

Correlation Coefficient

Almonty Industries  Adriatic Metals

Very weak diversification

The 3 months correlation between Almonty and Adriatic is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Almonty Industries and Adriatic Metals Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adriatic Metals Plc and Almonty Industries 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 Almonty Industries are associated (or correlated) with Adriatic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adriatic Metals Plc has no effect on the direction of Almonty Industries i.e., Almonty Industries and Adriatic Metals go up and down completely randomly.

Pair Corralation between Almonty Industries and Adriatic Metals

Assuming the 90 days horizon Almonty Industries is expected to generate 2.25 times less return on investment than Adriatic Metals. But when comparing it to its historical volatility, Almonty Industries is 1.04 times less risky than Adriatic Metals. It trades about 0.06 of its potential returns per unit of risk. Adriatic Metals Plc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  212.00  in Adriatic Metals Plc on September 12, 2024 and sell it today you would earn a total of  55.00  from holding Adriatic Metals Plc or generate 25.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Almonty Industries  vs.  Adriatic Metals Plc

Almonty Industries

Risk-Adjusted Performance

4 of 100

Insignificant

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

Adriatic Metals Plc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adriatic Metals Plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Adriatic Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Almonty Industries and Adriatic Metals

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

The idea behind Almonty Industries and Adriatic Metals Plc 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.