Correlation Between Adriatic Metals and Bravada Gold

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

Diversification Opportunities for Adriatic Metals and Bravada Gold

0.74

Correlation Coefficient

Adriatic Metals  Bravada Gold

Poor diversification

The 3 months correlation between Adriatic and Bravada is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals PLC and Bravada Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bravada Gold 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 Bravada Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bravada Gold has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and Bravada Gold go up and down completely randomly.

Pair Corralation between Adriatic Metals and Bravada Gold

Assuming the 90 days horizon Adriatic Metals PLC is expected to under-perform the Bravada Gold. But the pink sheet apears to be less risky and, when comparing its historical volatility, Adriatic Metals PLC is 5.59 times less risky than Bravada Gold. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Bravada Gold is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2.50  in Bravada Gold on October 24, 2024 and sell it today you would lose (0.96) from holding Bravada Gold or give up 38.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

Adriatic Metals PLC  vs.  Bravada Gold

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 latest fragile performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Bravada Gold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bravada Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bravada Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adriatic Metals and Bravada Gold

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

The idea behind Adriatic Metals PLC and Bravada Gold 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..