Correlation Between ADRIATIC METALS and Daimler Truck

Can any of the company-specific risk be diversified away by investing in both ADRIATIC METALS and Daimler Truck 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 Daimler Truck 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 Daimler Truck Holding, you can compare the effects of market volatilities on ADRIATIC METALS and Daimler Truck 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 Daimler Truck. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADRIATIC METALS and Daimler Truck.

Diversification Opportunities for ADRIATIC METALS and Daimler Truck

0.68

Correlation Coefficient

ADRIATIC METALS  Daimler Truck

Poor diversification

The 3 months correlation between ADRIATIC and Daimler is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding ADRIATIC METALS LS 013355 and Daimler Truck Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daimler Truck Holding 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 Daimler Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daimler Truck Holding has no effect on the direction of ADRIATIC METALS i.e., ADRIATIC METALS and Daimler Truck go up and down completely randomly.

Pair Corralation between ADRIATIC METALS and Daimler Truck

Assuming the 90 days trading horizon ADRIATIC METALS LS 013355 is expected to generate 1.69 times more return on investment than Daimler Truck. However, ADRIATIC METALS is 1.69 times more volatile than Daimler Truck Holding. It trades about -0.04 of its potential returns per unit of risk. Daimler Truck Holding is currently generating about -0.08 per unit of risk. If you would invest  240.00  in ADRIATIC METALS LS 013355 on October 6, 2024 and sell it today you would lose (16.00) from holding ADRIATIC METALS LS 013355 or give up 6.67% of portfolio value over 90 days.

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

ADRIATIC METALS LS 013355  vs.  Daimler Truck Holding

ADRIATIC METALS LS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ADRIATIC METALS LS 013355 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, ADRIATIC METALS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Daimler Truck Holding

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Daimler Truck Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Daimler Truck is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ADRIATIC METALS and Daimler Truck

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

The idea behind ADRIATIC METALS LS 013355 and Daimler Truck 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.