Correlation Between Navarre Minerals and ACDC Metals

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

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

Diversification Opportunities for Navarre Minerals and ACDC Metals

0.7

Correlation Coefficient

Navarre Minerals  ACDC Metals

Poor diversification

The 3 months correlation between Navarre and ACDC is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Navarre Minerals and ACDC Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACDC Metals and Navarre Minerals 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 Navarre Minerals are associated (or correlated) with ACDC Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACDC Metals has no effect on the direction of Navarre Minerals i.e., Navarre Minerals and ACDC Metals go up and down completely randomly.

Pair Corralation between Navarre Minerals and ACDC Metals

Assuming the 90 days trading horizon Navarre Minerals is expected to under-perform the ACDC Metals. In addition to that, Navarre Minerals is 3.24 times more volatile than ACDC Metals. It trades about -0.04 of its total potential returns per unit of risk. ACDC Metals is currently generating about -0.07 per unit of volatility. If you would invest  6.80  in ACDC Metals on October 26, 2024 and sell it today you would lose (1.50) from holding ACDC Metals or give up 22.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Navarre Minerals  vs.  ACDC Metals

Navarre Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Navarre Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ACDC Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ACDC Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Navarre Minerals and ACDC Metals

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

The idea behind Navarre Minerals and ACDC Metals 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.