Correlation Between Adriatic Metals and British Amer

Can any of the company-specific risk be diversified away by investing in both Adriatic Metals and British Amer 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 British Amer 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 Bailador Technology Invest, you can compare the effects of market volatilities on Adriatic Metals and British Amer 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 British Amer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adriatic Metals and British Amer.

Diversification Opportunities for Adriatic Metals and British Amer

0.8

Correlation Coefficient

Adriatic Metals  British Amer

Very poor diversification

The 3 months correlation between Adriatic and British is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals Plc and Bailador Technology Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bailador Technology 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 British Amer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bailador Technology has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and British Amer go up and down completely randomly.

Pair Corralation between Adriatic Metals and British Amer

Assuming the 90 days trading horizon Adriatic Metals Plc is expected to under-perform the British Amer. In addition to that, Adriatic Metals is 3.4 times more volatile than Bailador Technology Invest. It trades about -0.03 of its total potential returns per unit of risk. Bailador Technology Invest is currently generating about -0.08 per unit of volatility. If you would invest  127.00  in Bailador Technology Invest on September 5, 2024 and sell it today you would lose (2.00) from holding Bailador Technology Invest or give up 1.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

Adriatic Metals Plc  vs.  Bailador Technology Invest

Adriatic Metals Plc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Adriatic Metals Plc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Adriatic Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bailador Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bailador Technology Invest are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, British Amer may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Adriatic Metals and British Amer

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

The idea behind Adriatic Metals Plc and Bailador Technology Invest 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.