Correlation Between Adriatic Metals and Alerio Gold

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

Diversification Opportunities for Adriatic Metals and Alerio Gold

0.0

Correlation Coefficient

Adriatic Metals  Alerio Gold

Pay attention - limited upside

The 3 months correlation between Adriatic and Alerio is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals PLC and Alerio Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alerio Gold 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 Alerio Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alerio Gold Corp has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and Alerio Gold go up and down completely randomly.

Pair Corralation between Adriatic Metals and Alerio Gold

Assuming the 90 days horizon Adriatic Metals is expected to generate 5.4 times less return on investment than Alerio Gold. But when comparing it to its historical volatility, Adriatic Metals PLC is 3.43 times less risky than Alerio Gold. It trades about 0.02 of its potential returns per unit of risk. Alerio Gold Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6.10  in Alerio Gold Corp on October 11, 2024 and sell it today you would lose (4.07) from holding Alerio Gold Corp or give up 66.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Adriatic Metals PLC  vs.  Alerio Gold Corp

Adriatic Metals PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adriatic Metals PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Adriatic Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Alerio Gold Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alerio Gold Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Alerio Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adriatic Metals and Alerio Gold

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

The idea behind Adriatic Metals PLC and Alerio Gold 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.