Correlation Between Adriatic Metals and Geely Automobile

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

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

Diversification Opportunities for Adriatic Metals and Geely Automobile

-0.31

Correlation Coefficient

Adriatic Metals  Geely Automobile

Very good diversification

The 3 months correlation between Adriatic and Geely is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals Plc and Geely Automobile Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geely Automobile Holdings and Adriatic 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 Adriatic Metals Plc are associated (or correlated) with Geely Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geely Automobile Holdings has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and Geely Automobile go up and down completely randomly.

Pair Corralation between Adriatic Metals and Geely Automobile

Assuming the 90 days horizon Adriatic Metals is expected to generate 1.43 times less return on investment than Geely Automobile. In addition to that, Adriatic Metals is 1.26 times more volatile than Geely Automobile Holdings. It trades about 0.03 of its total potential returns per unit of risk. Geely Automobile Holdings is currently generating about 0.06 per unit of volatility. If you would invest  95.00  in Geely Automobile Holdings on October 26, 2024 and sell it today you would earn a total of  82.00  from holding Geely Automobile Holdings or generate 86.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.02%
Values	Daily Returns

Adriatic Metals Plc  vs.  Geely Automobile Holdings

Adriatic Metals Plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Geely Automobile Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Geely Automobile Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Geely Automobile is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Adriatic Metals and Geely Automobile

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

The idea behind Adriatic Metals Plc and Geely Automobile Holdings 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .