Correlation Between ADRIATIC METALS and Enel SpA

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

Diversification Opportunities for ADRIATIC METALS and Enel SpA

0.44

Correlation Coefficient

ADRIATIC METALS  Enel SpA

Very weak diversification

The 3 months correlation between ADRIATIC and Enel is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding ADRIATIC METALS LS 013355 and Enel SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel SpA 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 Enel SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel SpA has no effect on the direction of ADRIATIC METALS i.e., ADRIATIC METALS and Enel SpA go up and down completely randomly.

Pair Corralation between ADRIATIC METALS and Enel SpA

Assuming the 90 days trading horizon ADRIATIC METALS LS 013355 is expected to generate 2.17 times more return on investment than Enel SpA. However, ADRIATIC METALS is 2.17 times more volatile than Enel SpA. It trades about 0.06 of its potential returns per unit of risk. Enel SpA is currently generating about 0.05 per unit of risk. If you would invest  230.00  in ADRIATIC METALS LS 013355 on December 21, 2024 and sell it today you would earn a total of  22.00  from holding ADRIATIC METALS LS 013355 or generate 9.57% 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.  Enel SpA

ADRIATIC METALS LS

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ADRIATIC METALS LS 013355 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ADRIATIC METALS reported solid returns over the last few months and may actually be approaching a breakup point.

Enel SpA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Enel SpA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Enel SpA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ADRIATIC METALS and Enel SpA

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

The idea behind ADRIATIC METALS LS 013355 and Enel SpA 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.