Correlation Between Boss Resources and Adriatic Metals

Can any of the company-specific risk be diversified away by investing in both Boss Resources and Adriatic 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 Boss Resources and Adriatic Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Boss Resources and Adriatic Metals PLC, you can compare the effects of market volatilities on Boss Resources and Adriatic 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 Boss Resources with a short position of Adriatic Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boss Resources and Adriatic Metals.

Diversification Opportunities for Boss Resources and Adriatic Metals

0.01

Correlation Coefficient

Boss Resources  Adriatic Metals

Significant diversification

The 3 months correlation between Boss and Adriatic is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Boss Resources and Adriatic Metals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adriatic Metals PLC and Boss Resources 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 Boss Resources are associated (or correlated) with Adriatic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adriatic Metals PLC has no effect on the direction of Boss Resources i.e., Boss Resources and Adriatic Metals go up and down completely randomly.

Pair Corralation between Boss Resources and Adriatic Metals

Assuming the 90 days horizon Boss Resources is expected to generate 1.31 times less return on investment than Adriatic Metals. In addition to that, Boss Resources is 1.67 times more volatile than Adriatic Metals PLC. It trades about 0.05 of its total potential returns per unit of risk. Adriatic Metals PLC is currently generating about 0.11 per unit of volatility. If you would invest  235.00  in Adriatic Metals PLC on December 29, 2024 and sell it today you would earn a total of  45.00  from holding Adriatic Metals PLC or generate 19.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Boss Resources  vs.  Adriatic Metals PLC

Boss Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Boss Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Boss Resources reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Boss Resources and Adriatic Metals

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

The idea behind Boss Resources and Adriatic Metals PLC 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.