Correlation Between ADRIATIC METALS and Consolidated Communications

Can any of the company-specific risk be diversified away by investing in both ADRIATIC METALS and Consolidated Communications 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 Consolidated Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ADRIATIC METALS LS 013355 and Consolidated Communications Holdings, you can compare the effects of market volatilities on ADRIATIC METALS and Consolidated Communications 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 Consolidated Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADRIATIC METALS and Consolidated Communications.

Diversification Opportunities for ADRIATIC METALS and Consolidated Communications

0.46

Correlation Coefficient

ADRIATIC METALS  Consolidated Communications

Very weak diversification

The 3 months correlation between ADRIATIC and Consolidated is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding ADRIATIC METALS LS 013355 and Consolidated Communications Ho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Communications 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 LS 013355 are associated (or correlated) with Consolidated Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Communications has no effect on the direction of ADRIATIC METALS i.e., ADRIATIC METALS and Consolidated Communications go up and down completely randomly.

Pair Corralation between ADRIATIC METALS and Consolidated Communications

Assuming the 90 days trading horizon ADRIATIC METALS LS 013355 is expected to generate 4.16 times more return on investment than Consolidated Communications. However, ADRIATIC METALS is 4.16 times more volatile than Consolidated Communications Holdings. It trades about 0.03 of its potential returns per unit of risk. Consolidated Communications Holdings is currently generating about 0.06 per unit of risk. If you would invest  208.00  in ADRIATIC METALS LS 013355 on October 5, 2024 and sell it today you would earn a total of  26.00  from holding ADRIATIC METALS LS 013355 or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

ADRIATIC METALS LS 013355  vs.  Consolidated Communications Ho

ADRIATIC METALS LS

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days ADRIATIC METALS LS 013355 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly unsteady basic indicators, ADRIATIC METALS reported solid returns over the last few months and may actually be approaching a breakup point.

Consolidated Communications

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Consolidated Communications Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Consolidated Communications may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ADRIATIC METALS and Consolidated Communications

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

The idea behind ADRIATIC METALS LS 013355 and Consolidated Communications 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 Transaction History module to view history of all your transactions and understand their impact on performance.