Correlation Between Better World and Aqua Public
Can any of the company-specific risk be diversified away by investing in both Better World and Aqua Public 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 Better World and Aqua Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Better World Green and Aqua Public, you can compare the effects of market volatilities on Better World and Aqua Public 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 Better World with a short position of Aqua Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Better World and Aqua Public.
Diversification Opportunities for Better World and Aqua Public
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Better and Aqua is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Better World Green and Aqua Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua Public and Better World 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 Better World Green are associated (or correlated) with Aqua Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua Public has no effect on the direction of Better World i.e., Better World and Aqua Public go up and down completely randomly.
Pair Corralation between Better World and Aqua Public
Assuming the 90 days trading horizon Better World Green is expected to generate 1.33 times more return on investment than Aqua Public. However, Better World is 1.33 times more volatile than Aqua Public. It trades about -0.02 of its potential returns per unit of risk. Aqua Public is currently generating about -0.1 per unit of risk. If you would invest 43.00 in Better World Green on August 29, 2024 and sell it today you would lose (1.00) from holding Better World Green or give up 2.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Better World Green vs. Aqua Public
Performance |
| Timeline |
| Better World Green |
| Aqua Public |
Better World and Aqua Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Better World and Aqua Public
The main advantage of trading using opposite Better World and Aqua Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Better World position performs unexpectedly, Aqua Public 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 Aqua Public will offset losses from the drop in Aqua Public's long position.| Better World vs. Tata Steel Public | Better World vs. Thaifoods Group Public | Better World vs. TMT Steel Public | Better World vs. The Erawan Group |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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