Correlation Between Adriatic Metals and Commerce Resources

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

By analyzing existing cross correlation between Adriatic Metals Plc and Commerce Resources Corp, you can compare the effects of market volatilities on Adriatic Metals and Commerce 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 Commerce Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adriatic Metals and Commerce Resources.

Diversification Opportunities for Adriatic Metals and Commerce Resources

0.22

Correlation Coefficient

Adriatic Metals  Commerce Resources

Modest diversification

The 3 months correlation between Adriatic and Commerce is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals Plc and Commerce Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerce Resources Corp 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 Plc are associated (or correlated) with Commerce Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerce Resources Corp has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and Commerce Resources go up and down completely randomly.

Pair Corralation between Adriatic Metals and Commerce Resources

Assuming the 90 days horizon Adriatic Metals Plc is expected to generate 0.35 times more return on investment than Commerce Resources. However, Adriatic Metals Plc is 2.85 times less risky than Commerce Resources. It trades about 0.16 of its potential returns per unit of risk. Commerce Resources Corp is currently generating about 0.02 per unit of risk. If you would invest  200.00  in Adriatic Metals Plc on September 3, 2024 and sell it today you would earn a total of  82.00  from holding Adriatic Metals Plc or generate 41.0% return on investment over 90 days.

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

Adriatic Metals Plc  vs.  Commerce Resources Corp

Adriatic Metals Plc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Adriatic Metals Plc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Adriatic Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Commerce Resources Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Commerce Resources Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Commerce Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Adriatic Metals and Commerce Resources

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

The idea behind Adriatic Metals Plc and Commerce Resources Corp 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.