Correlation Between Glencore PLC and Adriatic Metals

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

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

Diversification Opportunities for Glencore PLC and Adriatic Metals

0.19

Correlation Coefficient

Glencore PLC  Adriatic Metals

Average diversification

The 3 months correlation between Glencore and Adriatic is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC ADR 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 Glencore PLC 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 Glencore PLC ADR 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 Glencore PLC i.e., Glencore PLC and Adriatic Metals go up and down completely randomly.

Pair Corralation between Glencore PLC and Adriatic Metals

Assuming the 90 days horizon Glencore PLC ADR is expected to under-perform the Adriatic Metals. But the pink sheet apears to be less risky and, when comparing its historical volatility, Glencore PLC ADR is 1.73 times less risky than Adriatic Metals. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Adriatic Metals PLC is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  200.00  in Adriatic Metals PLC on September 1, 2024 and sell it today you would earn a total of  63.00  from holding Adriatic Metals PLC or generate 31.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Glencore PLC ADR  vs.  Adriatic Metals PLC

Glencore PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glencore PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Glencore PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Adriatic Metals PLC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adriatic Metals PLC are ranked lower than 10 (%) 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 Glencore PLC and Adriatic Metals

The main advantage of trading using opposite Glencore PLC and Adriatic Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glencore PLC 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 Glencore PLC ADR 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.