Correlation Between Auto Trader and Tertiary Minerals

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

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

Diversification Opportunities for Auto Trader and Tertiary Minerals

0.55

Correlation Coefficient

Auto Trader  Tertiary Minerals

Very weak diversification

The 3 months correlation between Auto and Tertiary is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and Tertiary Minerals Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tertiary Minerals Plc and Auto Trader 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 Auto Trader Group are associated (or correlated) with Tertiary Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tertiary Minerals Plc has no effect on the direction of Auto Trader i.e., Auto Trader and Tertiary Minerals go up and down completely randomly.

Pair Corralation between Auto Trader and Tertiary Minerals

Assuming the 90 days trading horizon Auto Trader Group is expected to generate 0.28 times more return on investment than Tertiary Minerals. However, Auto Trader Group is 3.57 times less risky than Tertiary Minerals. It trades about 0.04 of its potential returns per unit of risk. Tertiary Minerals Plc is currently generating about -0.01 per unit of risk. If you would invest  80,220  in Auto Trader Group on April 20, 2025 and sell it today you would earn a total of  2,580  from holding Auto Trader Group or generate 3.22% return on investment over 90 days.

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

Auto Trader Group  vs.  Tertiary Minerals Plc

Auto Trader Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Auto Trader Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Auto Trader is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Tertiary Minerals Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tertiary Minerals Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Tertiary Minerals is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Auto Trader and Tertiary Minerals

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

The idea behind Auto Trader Group and Tertiary Minerals 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.