Correlation Between ARDAGH METAL and DevEx Resources

Can any of the company-specific risk be diversified away by investing in both ARDAGH METAL and DevEx 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 ARDAGH METAL and DevEx Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ARDAGH METAL PACDL 0001 and DevEx Resources Limited, you can compare the effects of market volatilities on ARDAGH METAL and DevEx 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 ARDAGH METAL with a short position of DevEx Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARDAGH METAL and DevEx Resources.

Diversification Opportunities for ARDAGH METAL and DevEx Resources

0.48

Correlation Coefficient

ARDAGH METAL  DevEx Resources

Very weak diversification

The 3 months correlation between ARDAGH and DevEx is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding ARDAGH METAL PACDL 0001 and DevEx Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DevEx Resources and ARDAGH METAL 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 ARDAGH METAL PACDL 0001 are associated (or correlated) with DevEx Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DevEx Resources has no effect on the direction of ARDAGH METAL i.e., ARDAGH METAL and DevEx Resources go up and down completely randomly.

Pair Corralation between ARDAGH METAL and DevEx Resources

Assuming the 90 days horizon ARDAGH METAL is expected to generate 5.9 times less return on investment than DevEx Resources. But when comparing it to its historical volatility, ARDAGH METAL PACDL 0001 is 2.31 times less risky than DevEx Resources. It trades about 0.02 of its potential returns per unit of risk. DevEx Resources Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4.75  in DevEx Resources Limited on December 21, 2024 and sell it today you would lose (0.25) from holding DevEx Resources Limited or give up 5.26% of portfolio value over 90 days.

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

ARDAGH METAL PACDL 0001  vs.  DevEx Resources Limited

ARDAGH METAL PACDL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ARDAGH METAL PACDL 0001 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ARDAGH METAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

DevEx Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DevEx Resources Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DevEx Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ARDAGH METAL and DevEx Resources

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

The idea behind ARDAGH METAL PACDL 0001 and DevEx 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.