Correlation Between Metall Zug and Adval Tech

Can any of the company-specific risk be diversified away by investing in both Metall Zug and Adval Tech 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 Metall Zug and Adval Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Metall Zug AG and Adval Tech Holding, you can compare the effects of market volatilities on Metall Zug and Adval Tech 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 Metall Zug with a short position of Adval Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metall Zug and Adval Tech.

Diversification Opportunities for Metall Zug and Adval Tech

0.67

Correlation Coefficient

Metall Zug  Adval Tech

Poor diversification

The 3 months correlation between Metall and Adval is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Metall Zug AG and Adval Tech Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adval Tech Holding and Metall Zug 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 Metall Zug AG are associated (or correlated) with Adval Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adval Tech Holding has no effect on the direction of Metall Zug i.e., Metall Zug and Adval Tech go up and down completely randomly.

Pair Corralation between Metall Zug and Adval Tech

Assuming the 90 days trading horizon Metall Zug AG is expected to generate 0.54 times more return on investment than Adval Tech. However, Metall Zug AG is 1.87 times less risky than Adval Tech. It trades about -0.08 of its potential returns per unit of risk. Adval Tech Holding is currently generating about -0.12 per unit of risk. If you would invest  122,000  in Metall Zug AG on August 30, 2024 and sell it today you would lose (9,500) from holding Metall Zug AG or give up 7.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	67.19%
Values	Daily Returns

Metall Zug AG  vs.  Adval Tech Holding

Metall Zug AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metall Zug AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Adval Tech Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adval Tech Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Metall Zug and Adval Tech

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

The idea behind Metall Zug AG and Adval Tech Holding 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 Commodity Directory module to find actively traded commodities issued by global exchanges.