Correlation Between Qbe Insurance and Adriatic Metals

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

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

Diversification Opportunities for Qbe Insurance and Adriatic Metals

0.65

Correlation Coefficient

Qbe Insurance  Adriatic Metals

Poor diversification

The 3 months correlation between Qbe and Adriatic is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Qbe Insurance Group 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 Qbe Insurance 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 Qbe Insurance Group 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 Qbe Insurance i.e., Qbe Insurance and Adriatic Metals go up and down completely randomly.

Pair Corralation between Qbe Insurance and Adriatic Metals

Assuming the 90 days trading horizon Qbe Insurance Group is expected to generate 0.55 times more return on investment than Adriatic Metals. However, Qbe Insurance Group is 1.81 times less risky than Adriatic Metals. It trades about 0.52 of its potential returns per unit of risk. Adriatic Metals Plc is currently generating about -0.03 per unit of risk. If you would invest  1,690  in Qbe Insurance Group on September 5, 2024 and sell it today you would earn a total of  334.00  from holding Qbe Insurance Group or generate 19.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Qbe Insurance Group  vs.  Adriatic Metals Plc

Qbe Insurance Group

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Qbe Insurance Group are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Qbe Insurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Adriatic Metals Plc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Adriatic Metals Plc are ranked lower than 17 (%) 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.

Pair Trading with Qbe Insurance and Adriatic Metals

The main advantage of trading using opposite Qbe Insurance and Adriatic Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qbe Insurance 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 Qbe Insurance Group 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.