Correlation Between Aqua Power and New Generation
Can any of the company-specific risk be diversified away by investing in both Aqua Power and New Generation 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 Aqua Power and New Generation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqua Power Systems and New Generation Consumer, you can compare the effects of market volatilities on Aqua Power and New Generation 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 Aqua Power with a short position of New Generation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqua Power and New Generation.
Diversification Opportunities for Aqua Power and New Generation
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aqua and New is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Aqua Power Systems and New Generation Consumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Generation Consumer and Aqua Power 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 Aqua Power Systems are associated (or correlated) with New Generation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Generation Consumer has no effect on the direction of Aqua Power i.e., Aqua Power and New Generation go up and down completely randomly.
Pair Corralation between Aqua Power and New Generation
Given the investment horizon of 90 days Aqua Power Systems is expected to generate 1.07 times more return on investment than New Generation. However, Aqua Power is 1.07 times more volatile than New Generation Consumer. It trades about 0.1 of its potential returns per unit of risk. New Generation Consumer is currently generating about 0.05 per unit of risk. If you would invest 0.90 in Aqua Power Systems on September 4, 2024 and sell it today you would earn a total of 1.53 from holding Aqua Power Systems or generate 170.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqua Power Systems vs. New Generation Consumer
Performance |
| Timeline |
| Aqua Power Systems |
| New Generation Consumer |
Aqua Power and New Generation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqua Power and New Generation
The main advantage of trading using opposite Aqua Power and New Generation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqua Power position performs unexpectedly, New Generation 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 New Generation will offset losses from the drop in New Generation's long position.| Aqua Power vs. Manaris Corp | Aqua Power vs. Green Planet Bio | Aqua Power vs. Continental Beverage Brands | Aqua Power vs. Opus Magnum Ameris |
| New Generation vs. Xtra Energy Corp | New Generation vs. Arsenal Digital Holdings | New Generation vs. UHF Logistics Group | New Generation vs. XCana Petroleum |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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