Correlation Between Adriatic Metals and Meteoric Resources

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

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

Diversification Opportunities for Adriatic Metals and Meteoric Resources

0.71

Correlation Coefficient

Adriatic Metals  Meteoric Resources

Poor diversification

The 3 months correlation between Adriatic and Meteoric is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals Plc and Meteoric Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meteoric Resources and Adriatic Metals 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 Adriatic Metals Plc are associated (or correlated) with Meteoric Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meteoric Resources has no effect on the direction of Adriatic Metals i.e., Adriatic Metals and Meteoric Resources go up and down completely randomly.

Pair Corralation between Adriatic Metals and Meteoric Resources

Assuming the 90 days horizon Adriatic Metals is expected to generate 3.74 times less return on investment than Meteoric Resources. But when comparing it to its historical volatility, Adriatic Metals Plc is 8.83 times less risky than Meteoric Resources. It trades about 0.3 of its potential returns per unit of risk. Meteoric Resources NL is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  7.00  in Meteoric Resources NL on April 23, 2025 and sell it today you would earn a total of  1.30  from holding Meteoric Resources NL or generate 18.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Adriatic Metals Plc  vs.  Meteoric Resources NL

Adriatic Metals Plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adriatic Metals Plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Adriatic Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Meteoric Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Meteoric Resources NL are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Meteoric Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adriatic Metals and Meteoric Resources

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

The idea behind Adriatic Metals Plc and Meteoric Resources NL 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.