Correlation Between ACDC Metals and Regal Investment
Can any of the company-specific risk be diversified away by investing in both ACDC Metals and Regal Investment 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 ACDC Metals and Regal Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ACDC Metals and Regal Investment, you can compare the effects of market volatilities on ACDC Metals and Regal Investment 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 ACDC Metals with a short position of Regal Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACDC Metals and Regal Investment.
Diversification Opportunities for ACDC Metals and Regal Investment
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ACDC and Regal is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding ACDC Metals and Regal Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regal Investment and ACDC Metals 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 ACDC Metals are associated (or correlated) with Regal Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regal Investment has no effect on the direction of ACDC Metals i.e., ACDC Metals and Regal Investment go up and down completely randomly.
Pair Corralation between ACDC Metals and Regal Investment
Assuming the 90 days trading horizon ACDC Metals is expected to under-perform the Regal Investment. In addition to that, ACDC Metals is 1.95 times more volatile than Regal Investment. It trades about -0.33 of its total potential returns per unit of risk. Regal Investment is currently generating about -0.01 per unit of volatility. If you would invest 355.00 in Regal Investment on August 25, 2024 and sell it today you would lose (2.00) from holding Regal Investment or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
ACDC Metals vs. Regal Investment
Performance |
| Timeline |
| ACDC Metals |
| Regal Investment |
ACDC Metals and Regal Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ACDC Metals and Regal Investment
The main advantage of trading using opposite ACDC Metals and Regal Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACDC Metals position performs unexpectedly, Regal Investment 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 Regal Investment will offset losses from the drop in Regal Investment's long position.| ACDC Metals vs. Flagship Investments | ACDC Metals vs. Alto Metals | ACDC Metals vs. Janison Education Group | ACDC Metals vs. Centuria Industrial Reit |
| Regal Investment vs. Westpac Banking | Regal Investment vs. ABACUS STORAGE KING | Regal Investment vs. Odyssey Energy | Regal Investment vs. Hotel Property Investments |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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