Correlation Between British Amer and Adriatic Metals

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

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

Diversification Opportunities for British Amer and Adriatic Metals

0.43

Correlation Coefficient

British Amer  Adriatic Metals

Very weak diversification

The 3 months correlation between British and Adriatic is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bailador Technology Invest 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 British Amer 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 Bailador Technology Invest 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 British Amer i.e., British Amer and Adriatic Metals go up and down completely randomly.

Pair Corralation between British Amer and Adriatic Metals

Assuming the 90 days trading horizon Bailador Technology Invest is expected to under-perform the Adriatic Metals. But the stock apears to be less risky and, when comparing its historical volatility, Bailador Technology Invest is 2.28 times less risky than Adriatic Metals. The stock trades about -0.06 of its potential returns per unit of risk. The Adriatic Metals Plc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  402.00  in Adriatic Metals Plc on December 1, 2024 and sell it today you would earn a total of  24.00  from holding Adriatic Metals Plc or generate 5.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Bailador Technology Invest  vs.  Adriatic Metals Plc

Bailador Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bailador Technology Invest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, British Amer is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Adriatic Metals Plc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Adriatic Metals Plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Adriatic Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with British Amer and Adriatic Metals

The main advantage of trading using opposite British Amer and Adriatic Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Amer 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 Bailador Technology Invest 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.

Check out your portfolio center.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.