Correlation Between Adriatic Metals and IXUP

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

Diversification Opportunities for Adriatic Metals and IXUP

-0.07

Correlation Coefficient

Adriatic Metals  IXUP

Good diversification

The 3 months correlation between Adriatic and IXUP is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals Plc and IXUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IXUP 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 IXUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IXUP has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and IXUP go up and down completely randomly.

Pair Corralation between Adriatic Metals and IXUP

Assuming the 90 days trading horizon Adriatic Metals is expected to generate 2.29 times less return on investment than IXUP. But when comparing it to its historical volatility, Adriatic Metals Plc is 5.04 times less risky than IXUP. It trades about 0.04 of its potential returns per unit of risk. IXUP is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1.20  in IXUP on December 1, 2024 and sell it today you would lose (0.20) from holding IXUP or give up 16.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Adriatic Metals Plc  vs.  IXUP

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.

IXUP

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IXUP are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IXUP unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adriatic Metals and IXUP

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

The idea behind Adriatic Metals Plc and IXUP 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.