Correlation Between Aqua Power and TransAKT
Can any of the company-specific risk be diversified away by investing in both Aqua Power and TransAKT 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 TransAKT 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 TransAKT, you can compare the effects of market volatilities on Aqua Power and TransAKT 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 TransAKT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqua Power and TransAKT.
Diversification Opportunities for Aqua Power and TransAKT
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aqua and TransAKT is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Aqua Power Systems and TransAKT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAKT 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 TransAKT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAKT has no effect on the direction of Aqua Power i.e., Aqua Power and TransAKT go up and down completely randomly.
Pair Corralation between Aqua Power and TransAKT
Given the investment horizon of 90 days Aqua Power is expected to generate 7.15 times less return on investment than TransAKT. But when comparing it to its historical volatility, Aqua Power Systems is 7.55 times less risky than TransAKT. It trades about 0.12 of its potential returns per unit of risk. TransAKT is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 0.22 in TransAKT on September 3, 2024 and sell it today you would earn a total of 2.55 from holding TransAKT or generate 1159.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Aqua Power Systems vs. TransAKT
Performance |
| Timeline |
| Aqua Power Systems |
| TransAKT |
Aqua Power and TransAKT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqua Power and TransAKT
The main advantage of trading using opposite Aqua Power and TransAKT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqua Power position performs unexpectedly, TransAKT 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 TransAKT will offset losses from the drop in TransAKT'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 |
| TransAKT vs. TOMI Environmental Solutions | TransAKT vs. SCOR PK | TransAKT vs. HUMANA INC | TransAKT vs. Aquagold International |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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