Correlation Between A-Cap Energy and Adriatic Metals

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Can any of the company-specific risk be diversified away by investing in both A-Cap Energy 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 A-Cap Energy and Adriatic Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between A Cap Energy Limited and Adriatic Metals PLC, you can compare the effects of market volatilities on A-Cap Energy 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 A-Cap Energy with a short position of Adriatic Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of A-Cap Energy and Adriatic Metals.

Diversification Opportunities for A-Cap Energy and Adriatic Metals

-0.48
  Correlation Coefficient

Very good diversification

The 3 months correlation between A-Cap and Adriatic is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding A Cap Energy Limited 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 A-Cap Energy 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 A Cap Energy Limited 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 A-Cap Energy i.e., A-Cap Energy and Adriatic Metals go up and down completely randomly.

Pair Corralation between A-Cap Energy and Adriatic Metals

If you would invest  200.00  in Adriatic Metals PLC on September 2, 2024 and sell it today you would earn a total of  63.00  from holding Adriatic Metals PLC or generate 31.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy1.54%
ValuesDaily Returns

A Cap Energy Limited  vs.  Adriatic Metals PLC

 Performance 
       Timeline  
A Cap Energy 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days A Cap Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, A-Cap Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Adriatic Metals PLC 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Adriatic Metals PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain essential indicators, Adriatic Metals reported solid returns over the last few months and may actually be approaching a breakup point.

A-Cap Energy and Adriatic Metals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with A-Cap Energy and Adriatic Metals

The main advantage of trading using opposite A-Cap Energy and Adriatic Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A-Cap Energy 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 A Cap Energy Limited 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.
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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