Correlation Between Aqua Public and Grande Asset
Can any of the company-specific risk be diversified away by investing in both Aqua Public and Grande Asset 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 Public and Grande Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqua Public and Grande Asset Hotels, you can compare the effects of market volatilities on Aqua Public and Grande Asset 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 Public with a short position of Grande Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqua Public and Grande Asset.
Diversification Opportunities for Aqua Public and Grande Asset
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aqua and Grande is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Aqua Public and Grande Asset Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grande Asset Hotels and Aqua Public 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 Public are associated (or correlated) with Grande Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grande Asset Hotels has no effect on the direction of Aqua Public i.e., Aqua Public and Grande Asset go up and down completely randomly.
Pair Corralation between Aqua Public and Grande Asset
Assuming the 90 days trading horizon Aqua Public is expected to generate 0.35 times more return on investment than Grande Asset. However, Aqua Public is 2.85 times less risky than Grande Asset. It trades about -0.04 of its potential returns per unit of risk. Grande Asset Hotels is currently generating about -0.17 per unit of risk. If you would invest 35.00 in Aqua Public on August 30, 2024 and sell it today you would lose (1.00) from holding Aqua Public or give up 2.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqua Public vs. Grande Asset Hotels
Performance |
| Timeline |
| Aqua Public |
| Grande Asset Hotels |
Aqua Public and Grande Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqua Public and Grande Asset
The main advantage of trading using opposite Aqua Public and Grande Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqua Public position performs unexpectedly, Grande Asset 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 Grande Asset will offset losses from the drop in Grande Asset's long position.| Aqua Public vs. Big Camera | Aqua Public vs. Bangkok Chain Hospital | Aqua Public vs. Grande Asset Hotels | Aqua Public vs. Better World Green |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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