Correlation Between REGAL ASIAN and Major Drilling
Can any of the company-specific risk be diversified away by investing in both REGAL ASIAN and Major Drilling 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 Major Drilling 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 Major Drilling Group, you can compare the effects of market volatilities on REGAL ASIAN and Major Drilling 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 Major Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of REGAL ASIAN and Major Drilling.
Diversification Opportunities for REGAL ASIAN and Major Drilling
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between REGAL and Major is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding REGAL ASIAN INVESTMENTS and Major Drilling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Drilling Group 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 Major Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Drilling Group has no effect on the direction of REGAL ASIAN i.e., REGAL ASIAN and Major Drilling go up and down completely randomly.
Pair Corralation between REGAL ASIAN and Major Drilling
Assuming the 90 days trading horizon REGAL ASIAN INVESTMENTS is expected to generate 0.66 times more return on investment than Major Drilling. However, REGAL ASIAN INVESTMENTS is 1.51 times less risky than Major Drilling. It trades about 0.02 of its potential returns per unit of risk. Major Drilling Group is currently generating about -0.03 per unit of risk. If you would invest 121.00 in REGAL ASIAN INVESTMENTS on September 2, 2024 and sell it today you would earn a total of 4.00 from holding REGAL ASIAN INVESTMENTS or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
REGAL ASIAN INVESTMENTS vs. Major Drilling Group
Performance |
| Timeline |
| REGAL ASIAN INVESTMENTS |
| Major Drilling Group |
REGAL ASIAN and Major Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REGAL ASIAN and Major Drilling
The main advantage of trading using opposite REGAL ASIAN and Major Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REGAL ASIAN position performs unexpectedly, Major Drilling 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 Major Drilling will offset losses from the drop in Major Drilling's long position.| REGAL ASIAN vs. Apple Inc | REGAL ASIAN vs. Apple Inc | REGAL ASIAN vs. Apple Inc | REGAL ASIAN vs. Apple Inc |
| Major Drilling vs. BHP Group Limited | Major Drilling vs. Rio Tinto Group | Major Drilling vs. Vale SA | Major Drilling vs. Vale SA |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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