Correlation Between Rockwood Realisation and AdvancedAdvT

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

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

Diversification Opportunities for Rockwood Realisation and AdvancedAdvT

0.87

Correlation Coefficient

Rockwood Realisation  AdvancedAdvT

Very poor diversification

The 3 months correlation between Rockwood and AdvancedAdvT is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Rockwood Realisation PLC and AdvancedAdvT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvancedAdvT and Rockwood Realisation 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 Rockwood Realisation PLC are associated (or correlated) with AdvancedAdvT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvancedAdvT has no effect on the direction of Rockwood Realisation i.e., Rockwood Realisation and AdvancedAdvT go up and down completely randomly.

Pair Corralation between Rockwood Realisation and AdvancedAdvT

Assuming the 90 days trading horizon Rockwood Realisation PLC is expected to generate 0.44 times more return on investment than AdvancedAdvT. However, Rockwood Realisation PLC is 2.25 times less risky than AdvancedAdvT. It trades about 0.46 of its potential returns per unit of risk. AdvancedAdvT is currently generating about 0.19 per unit of risk. If you would invest  24,300  in Rockwood Realisation PLC on April 25, 2025 and sell it today you would earn a total of  6,300  from holding Rockwood Realisation PLC or generate 25.93% return on investment over 90 days.

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

Rockwood Realisation PLC  vs.  AdvancedAdvT

Rockwood Realisation PLC

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Rockwood Realisation PLC are ranked lower than 36 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Rockwood Realisation exhibited solid returns over the last few months and may actually be approaching a breakup point.

AdvancedAdvT

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AdvancedAdvT are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AdvancedAdvT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rockwood Realisation and AdvancedAdvT

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

The idea behind Rockwood Realisation PLC and AdvancedAdvT 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.