Correlation Between Adriatic Metals and Almonty Industries

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

Diversification Opportunities for Adriatic Metals and Almonty Industries

0.46

Correlation Coefficient

Adriatic Metals  Almonty Industries

Very weak diversification

The 3 months correlation between Adriatic and Almonty is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals PLC and Almonty Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Almonty Industries 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 Almonty Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Almonty Industries has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and Almonty Industries go up and down completely randomly.

Pair Corralation between Adriatic Metals and Almonty Industries

Assuming the 90 days horizon Adriatic Metals is expected to generate 5.31 times less return on investment than Almonty Industries. But when comparing it to its historical volatility, Adriatic Metals PLC is 1.29 times less risky than Almonty Industries. It trades about 0.02 of its potential returns per unit of risk. Almonty Industries is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  44.00  in Almonty Industries on November 27, 2024 and sell it today you would earn a total of  91.00  from holding Almonty Industries or generate 206.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.95%
Values	Daily Returns

Adriatic Metals PLC  vs.  Almonty Industries

Adriatic Metals PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Adriatic Metals PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Almonty Industries

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Almonty Industries are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Almonty Industries reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adriatic Metals and Almonty Industries

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

The idea behind Adriatic Metals PLC and Almonty Industries 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.