Correlation Between Adriatic Metals and Macquarie

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

Diversification Opportunities for Adriatic Metals and Macquarie

0.16

Correlation Coefficient

Adriatic Metals  Macquarie

Average diversification

The 3 months correlation between Adriatic and Macquarie is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals Plc and Macquarie Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group 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 Macquarie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Group has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and Macquarie go up and down completely randomly.

Pair Corralation between Adriatic Metals and Macquarie

Assuming the 90 days trading horizon Adriatic Metals Plc is expected to under-perform the Macquarie. In addition to that, Adriatic Metals is 2.46 times more volatile than Macquarie Group. It trades about -0.11 of its total potential returns per unit of risk. Macquarie Group is currently generating about -0.11 per unit of volatility. If you would invest  23,105  in Macquarie Group on September 20, 2024 and sell it today you would lose (399.00) from holding Macquarie Group or give up 1.73% of portfolio value over 90 days.

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

Adriatic Metals Plc  vs.  Macquarie Group

Adriatic Metals Plc

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Adriatic Metals Plc are ranked lower than 10 (%) 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.

Macquarie Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macquarie Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Macquarie is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Adriatic Metals and Macquarie

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

The idea behind Adriatic Metals Plc and Macquarie Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.