Correlation Between Panther Metals and Adams Plc

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

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

Diversification Opportunities for Panther Metals and Adams Plc

-0.46

Correlation Coefficient

Panther Metals  Adams Plc

Very good diversification

The 3 months correlation between Panther and Adams is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Panther Metals PLC and Adams Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adams Plc and Panther 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 Panther Metals PLC are associated (or correlated) with Adams Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adams Plc has no effect on the direction of Panther Metals i.e., Panther Metals and Adams Plc go up and down completely randomly.

Pair Corralation between Panther Metals and Adams Plc

Assuming the 90 days trading horizon Panther Metals PLC is expected to generate 1.5 times more return on investment than Adams Plc. However, Panther Metals is 1.5 times more volatile than Adams Plc. It trades about -0.03 of its potential returns per unit of risk. Adams Plc is currently generating about -0.17 per unit of risk. If you would invest  11,000  in Panther Metals PLC on September 12, 2024 and sell it today you would lose (1,500) from holding Panther Metals PLC or give up 13.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.85%
Values	Daily Returns

Panther Metals PLC  vs.  Adams Plc

Panther Metals PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Panther Metals PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Adams Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adams Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Panther Metals and Adams Plc

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

The idea behind Panther Metals PLC and Adams 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.