Correlation Between Adriatic Metals and Freegold Ventures

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

Diversification Opportunities for Adriatic Metals and Freegold Ventures

0.45

Correlation Coefficient

Adriatic Metals  Freegold Ventures

Very weak diversification

The 3 months correlation between Adriatic and Freegold is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals PLC and Freegold Ventures Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freegold Ventures 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 Freegold Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freegold Ventures has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and Freegold Ventures go up and down completely randomly.

Pair Corralation between Adriatic Metals and Freegold Ventures

Assuming the 90 days horizon Adriatic Metals is expected to generate 2.52 times less return on investment than Freegold Ventures. But when comparing it to its historical volatility, Adriatic Metals PLC is 1.72 times less risky than Freegold Ventures. It trades about 0.07 of its potential returns per unit of risk. Freegold Ventures Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  49.00  in Freegold Ventures Limited on December 22, 2024 and sell it today you would earn a total of  12.00  from holding Freegold Ventures Limited or generate 24.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.85%
Values	Daily Returns

Adriatic Metals PLC  vs.  Freegold Ventures Limited

Adriatic Metals PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Adriatic Metals PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Adriatic Metals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Freegold Ventures

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Freegold Ventures Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Freegold Ventures reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adriatic Metals and Freegold Ventures

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

The idea behind Adriatic Metals PLC and Freegold Ventures Limited 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.