Correlation Between ADRIATIC METALS and Volkswagen

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

Diversification Opportunities for ADRIATIC METALS and Volkswagen

-0.29

Correlation Coefficient

ADRIATIC METALS  Volkswagen

Very good diversification

The 3 months correlation between ADRIATIC and Volkswagen is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding ADRIATIC METALS LS 013355 and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of ADRIATIC METALS i.e., ADRIATIC METALS and Volkswagen go up and down completely randomly.

Pair Corralation between ADRIATIC METALS and Volkswagen

Assuming the 90 days trading horizon ADRIATIC METALS LS 013355 is expected to generate 2.07 times more return on investment than Volkswagen. However, ADRIATIC METALS is 2.07 times more volatile than Volkswagen AG. It trades about 0.03 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.05 per unit of risk. If you would invest  200.00  in ADRIATIC METALS LS 013355 on October 4, 2024 and sell it today you would earn a total of  34.00  from holding ADRIATIC METALS LS 013355 or generate 17.0% return on investment over 90 days.

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

ADRIATIC METALS LS 013355  vs.  Volkswagen AG

ADRIATIC METALS LS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ADRIATIC METALS LS 013355 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, ADRIATIC METALS reported solid returns over the last few months and may actually be approaching a breakup point.

Volkswagen AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Volkswagen AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with ADRIATIC METALS and Volkswagen

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

The idea behind ADRIATIC METALS LS 013355 and Volkswagen AG 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.