Correlation Between Adriatic Metals and Aztec Minerals

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

Diversification Opportunities for Adriatic Metals and Aztec Minerals

0.69

Correlation Coefficient

Adriatic Metals  Aztec Minerals

Poor diversification

The 3 months correlation between Adriatic and Aztec is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals PLC and Aztec Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aztec Minerals 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 Aztec Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aztec Minerals Corp has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and Aztec Minerals go up and down completely randomly.

Pair Corralation between Adriatic Metals and Aztec Minerals

Assuming the 90 days horizon Adriatic Metals PLC is expected to under-perform the Aztec Minerals. But the pink sheet apears to be less risky and, when comparing its historical volatility, Adriatic Metals PLC is 3.69 times less risky than Aztec Minerals. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Aztec Minerals Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Aztec Minerals Corp on October 7, 2024 and sell it today you would lose (3.00) from holding Aztec Minerals Corp or give up 17.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.35%
Values	Daily Returns

Adriatic Metals PLC  vs.  Aztec Minerals 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.

Aztec Minerals Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aztec Minerals Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Aztec Minerals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Adriatic Metals and Aztec Minerals

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

The idea behind Adriatic Metals PLC and Aztec Minerals 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.