Correlation Between Adriatic Metals and Hansen Technologies

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

Diversification Opportunities for Adriatic Metals and Hansen Technologies

0.26

Correlation Coefficient

Adriatic Metals  Hansen Technologies

Modest diversification

The 3 months correlation between Adriatic and Hansen is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals Plc and Hansen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansen Technologies 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 Hansen Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansen Technologies has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and Hansen Technologies go up and down completely randomly.

Pair Corralation between Adriatic Metals and Hansen Technologies

Assuming the 90 days trading horizon Adriatic Metals Plc is expected to generate 1.82 times more return on investment than Hansen Technologies. However, Adriatic Metals is 1.82 times more volatile than Hansen Technologies. It trades about 0.03 of its potential returns per unit of risk. Hansen Technologies is currently generating about 0.03 per unit of risk. If you would invest  363.00  in Adriatic Metals Plc on December 2, 2024 and sell it today you would earn a total of  63.00  from holding Adriatic Metals Plc or generate 17.36% 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.  Hansen Technologies

Adriatic Metals Plc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Adriatic Metals Plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Adriatic Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Hansen Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hansen Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Adriatic Metals and Hansen Technologies

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

The idea behind Adriatic Metals Plc and Hansen Technologies 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.