Correlation Between Adventus Mining and Eramet SA

Can any of the company-specific risk be diversified away by investing in both Adventus Mining and Eramet SA 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 Adventus Mining and Eramet SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Adventus Mining and Eramet SA ADR, you can compare the effects of market volatilities on Adventus Mining and Eramet SA 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 Adventus Mining with a short position of Eramet SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adventus Mining and Eramet SA.

Diversification Opportunities for Adventus Mining and Eramet SA

0.18

Correlation Coefficient

Adventus Mining  Eramet SA

Average diversification

The 3 months correlation between Adventus and Eramet is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Adventus Mining and Eramet SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eramet SA ADR and Adventus Mining 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 Adventus Mining are associated (or correlated) with Eramet SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eramet SA ADR has no effect on the direction of Adventus Mining i.e., Adventus Mining and Eramet SA go up and down completely randomly.

Pair Corralation between Adventus Mining and Eramet SA

If you would invest  570.00  in Eramet SA ADR on October 10, 2024 and sell it today you would earn a total of  12.00  from holding Eramet SA ADR or generate 2.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Adventus Mining  vs.  Eramet SA ADR

Adventus Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adventus Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Adventus Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Eramet SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eramet SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Adventus Mining and Eramet SA

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

The idea behind Adventus Mining and Eramet SA ADR 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.