Correlation Between Adriatic Metals and ATT

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

Diversification Opportunities for Adriatic Metals and ATT

0.84

Correlation Coefficient

Adriatic Metals  ATT

Very poor diversification

The 3 months correlation between Adriatic and ATT is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals PLC and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and ATT go up and down completely randomly.

Pair Corralation between Adriatic Metals and ATT

Assuming the 90 days horizon Adriatic Metals is expected to generate 1.17 times less return on investment than ATT. In addition to that, Adriatic Metals is 1.78 times more volatile than ATT Inc. It trades about 0.1 of its total potential returns per unit of risk. ATT Inc is currently generating about 0.21 per unit of volatility. If you would invest  2,257  in ATT Inc on December 27, 2024 and sell it today you would earn a total of  474.00  from holding ATT Inc or generate 21.0% return on investment over 90 days.

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

Adriatic Metals PLC  vs.  ATT Inc

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.

ATT Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ATT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adriatic Metals and ATT

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

The idea behind Adriatic Metals PLC and ATT Inc 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.