Correlation Between Navigator Global and Adriatic Metals

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

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

Diversification Opportunities for Navigator Global and Adriatic Metals

-0.36

Correlation Coefficient

Navigator Global  Adriatic Metals

Very good diversification

The 3 months correlation between Navigator and Adriatic is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Navigator Global Investments 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 Navigator Global 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 Navigator Global Investments 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 Navigator Global i.e., Navigator Global and Adriatic Metals go up and down completely randomly.

Pair Corralation between Navigator Global and Adriatic Metals

Assuming the 90 days trading horizon Navigator Global Investments is expected to generate 0.72 times more return on investment than Adriatic Metals. However, Navigator Global Investments is 1.39 times less risky than Adriatic Metals. It trades about 0.05 of its potential returns per unit of risk. Adriatic Metals Plc is currently generating about 0.02 per unit of risk. If you would invest  130.00  in Navigator Global Investments on October 9, 2024 and sell it today you would earn a total of  33.00  from holding Navigator Global Investments or generate 25.38% return on investment over 90 days.

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

Navigator Global Investments  vs.  Adriatic Metals Plc

Navigator Global Inv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Navigator Global Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Navigator Global 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

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Adriatic Metals Plc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Adriatic Metals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Navigator Global and Adriatic Metals

The main advantage of trading using opposite Navigator Global and Adriatic Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Navigator Global 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 Navigator Global Investments 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.