Correlation Between Adriatic Metals and C3 Metals

Can any of the company-specific risk be diversified away by investing in both Adriatic Metals and C3 Metals 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 C3 Metals 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 C3 Metals, you can compare the effects of market volatilities on Adriatic Metals and C3 Metals 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 C3 Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adriatic Metals and C3 Metals.

Diversification Opportunities for Adriatic Metals and C3 Metals

0.56

Correlation Coefficient

Adriatic Metals  C3 Metals

Very weak diversification

The 3 months correlation between Adriatic and CUAUF is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals PLC and C3 Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C3 Metals 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 C3 Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C3 Metals has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and C3 Metals go up and down completely randomly.

Pair Corralation between Adriatic Metals and C3 Metals

Assuming the 90 days horizon Adriatic Metals is expected to generate 7.16 times less return on investment than C3 Metals. But when comparing it to its historical volatility, Adriatic Metals PLC is 3.84 times less risky than C3 Metals. It trades about 0.1 of its potential returns per unit of risk. C3 Metals is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  17.00  in C3 Metals on December 27, 2024 and sell it today you would earn a total of  27.00  from holding C3 Metals or generate 158.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Adriatic Metals PLC  vs.  C3 Metals

Adriatic Metals PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adriatic Metals PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Adriatic Metals reported solid returns over the last few months and may actually be approaching a breakup point.

C3 Metals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in C3 Metals are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, C3 Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adriatic Metals and C3 Metals

The main advantage of trading using opposite Adriatic Metals and C3 Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adriatic Metals position performs unexpectedly, C3 Metals 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 C3 Metals will offset losses from the drop in C3 Metals' long position.

The idea behind Adriatic Metals PLC and C3 Metals 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.