Correlation Between Polymetal International and American Clean

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

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

Diversification Opportunities for Polymetal International and American Clean

-0.36

Correlation Coefficient

Polymetal International  American Clean

Very good diversification

The 3 months correlation between Polymetal and American is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Polymetal International PLC and American Clean Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Clean Resources and Polymetal International 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 Polymetal International PLC are associated (or correlated) with American Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Clean Resources has no effect on the direction of Polymetal International i.e., Polymetal International and American Clean go up and down completely randomly.

Pair Corralation between Polymetal International and American Clean

Assuming the 90 days horizon Polymetal International PLC is expected to under-perform the American Clean. But the pink sheet apears to be less risky and, when comparing its historical volatility, Polymetal International PLC is 1.22 times less risky than American Clean. The pink sheet trades about -0.01 of its potential returns per unit of risk. The American Clean Resources is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  299.00  in American Clean Resources on March 2, 2024 and sell it today you would earn a total of  639.00  from holding American Clean Resources or generate 213.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	58.23%
Values	Daily Returns

Polymetal International PLC  vs.  American Clean Resources

Polymetal International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polymetal International PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Polymetal International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

American Clean Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in American Clean Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, American Clean reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Polymetal International and American Clean

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

The idea behind Polymetal International PLC and American Clean Resources 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.