Correlation Between REGAL ASIAN and AUTO TRADER
Can any of the company-specific risk be diversified away by investing in both REGAL ASIAN and AUTO TRADER 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 REGAL ASIAN and AUTO TRADER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REGAL ASIAN INVESTMENTS and AUTO TRADER ADR, you can compare the effects of market volatilities on REGAL ASIAN and AUTO TRADER 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 REGAL ASIAN with a short position of AUTO TRADER. Check out your portfolio center. Please also check ongoing floating volatility patterns of REGAL ASIAN and AUTO TRADER.
Diversification Opportunities for REGAL ASIAN and AUTO TRADER
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between REGAL and AUTO is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding REGAL ASIAN INVESTMENTS and AUTO TRADER ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUTO TRADER ADR and REGAL ASIAN 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 REGAL ASIAN INVESTMENTS are associated (or correlated) with AUTO TRADER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUTO TRADER ADR has no effect on the direction of REGAL ASIAN i.e., REGAL ASIAN and AUTO TRADER go up and down completely randomly.
Pair Corralation between REGAL ASIAN and AUTO TRADER
Assuming the 90 days trading horizon REGAL ASIAN INVESTMENTS is expected to under-perform the AUTO TRADER. But the stock apears to be less risky and, when comparing its historical volatility, REGAL ASIAN INVESTMENTS is 1.37 times less risky than AUTO TRADER. The stock trades about -0.24 of its potential returns per unit of risk. The AUTO TRADER ADR is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 246.00 in AUTO TRADER ADR on September 2, 2024 and sell it today you would earn a total of 2.00 from holding AUTO TRADER ADR or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REGAL ASIAN INVESTMENTS vs. AUTO TRADER ADR
Performance |
| Timeline |
| REGAL ASIAN INVESTMENTS |
| AUTO TRADER ADR |
REGAL ASIAN and AUTO TRADER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REGAL ASIAN and AUTO TRADER
The main advantage of trading using opposite REGAL ASIAN and AUTO TRADER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REGAL ASIAN position performs unexpectedly, AUTO TRADER 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 AUTO TRADER will offset losses from the drop in AUTO TRADER's long position.| REGAL ASIAN vs. Apple Inc | REGAL ASIAN vs. Apple Inc | REGAL ASIAN vs. Apple Inc | REGAL ASIAN vs. Apple Inc |
| AUTO TRADER vs. SERI INDUSTRIAL EO | AUTO TRADER vs. Evolution Mining Limited | AUTO TRADER vs. Corporate Travel Management | AUTO TRADER vs. ADRIATIC METALS LS 013355 |
Check out your portfolio center.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 Global Correlations module to find global opportunities by holding instruments from different markets.
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