Correlation Between Adams Natural and Acm Dynamic

Can any of the company-specific risk be diversified away by investing in both Adams Natural and Acm Dynamic 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 Adams Natural and Acm Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Adams Natural Resources and Acm Dynamic Opportunity, you can compare the effects of market volatilities on Adams Natural and Acm Dynamic 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 Adams Natural with a short position of Acm Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Natural and Acm Dynamic.

Diversification Opportunities for Adams Natural and Acm Dynamic

-0.21

Correlation Coefficient

Adams Natural  Acm Dynamic

Very good diversification

The 3 months correlation between Adams and Acm is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Adams Natural Resources and Acm Dynamic Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acm Dynamic Opportunity and Adams Natural 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 Adams Natural Resources are associated (or correlated) with Acm Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acm Dynamic Opportunity has no effect on the direction of Adams Natural i.e., Adams Natural and Acm Dynamic go up and down completely randomly.

Pair Corralation between Adams Natural and Acm Dynamic

Considering the 90-day investment horizon Adams Natural Resources is expected to generate 0.78 times more return on investment than Acm Dynamic. However, Adams Natural Resources is 1.29 times less risky than Acm Dynamic. It trades about 0.06 of its potential returns per unit of risk. Acm Dynamic Opportunity is currently generating about 0.01 per unit of risk. If you would invest  1,812  in Adams Natural Resources on December 3, 2024 and sell it today you would earn a total of  368.00  from holding Adams Natural Resources or generate 20.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.7%
Values	Daily Returns

Adams Natural Resources  vs.  Acm Dynamic Opportunity

Adams Natural Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adams Natural Resources has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy technical and fundamental indicators, Adams Natural is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Acm Dynamic Opportunity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Acm Dynamic Opportunity has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Adams Natural and Acm Dynamic

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

The idea behind Adams Natural Resources and Acm Dynamic Opportunity 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.