Correlation Between ADRIATIC METALS and Mineral Resources

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

Diversification Opportunities for ADRIATIC METALS and Mineral Resources

-0.71

Correlation Coefficient

ADRIATIC METALS  Mineral Resources

Pay attention - limited upside

The 3 months correlation between ADRIATIC and Mineral is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding ADRIATIC METALS LS 013355 and Mineral Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mineral Resources 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 Mineral Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mineral Resources has no effect on the direction of ADRIATIC METALS i.e., ADRIATIC METALS and Mineral Resources go up and down completely randomly.

Pair Corralation between ADRIATIC METALS and Mineral Resources

Assuming the 90 days trading horizon ADRIATIC METALS LS 013355 is expected to generate 1.08 times more return on investment than Mineral Resources. However, ADRIATIC METALS is 1.08 times more volatile than Mineral Resources Limited. It trades about 0.03 of its potential returns per unit of risk. Mineral Resources Limited is currently generating about -0.05 per unit of risk. If you would invest  202.00  in ADRIATIC METALS LS 013355 on October 5, 2024 and sell it today you would earn a total of  32.00  from holding ADRIATIC METALS LS 013355 or generate 15.84% return on investment over 90 days.

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

ADRIATIC METALS LS 013355  vs.  Mineral Resources Limited

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.

Mineral Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mineral Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ADRIATIC METALS and Mineral Resources

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

The idea behind ADRIATIC METALS LS 013355 and Mineral Resources Limited 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.