Correlation Between Collins Foods and Regal Investment
Can any of the company-specific risk be diversified away by investing in both Collins Foods 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 Collins Foods and Regal Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods and Regal Investment, you can compare the effects of market volatilities on Collins Foods 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 Collins Foods with a short position of Regal Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Regal Investment.
Diversification Opportunities for Collins Foods and Regal Investment
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Collins and Regal is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Regal Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regal Investment and Collins Foods 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 Collins Foods 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 Collins Foods i.e., Collins Foods and Regal Investment go up and down completely randomly.
Pair Corralation between Collins Foods and Regal Investment
Assuming the 90 days trading horizon Collins Foods is expected to under-perform the Regal Investment. In addition to that, Collins Foods is 1.34 times more volatile than Regal Investment. It trades about -0.01 of its total potential returns per unit of risk. Regal Investment is currently generating about 0.08 per unit of volatility. If you would invest 248.00 in Regal Investment on August 28, 2024 and sell it today you would earn a total of 101.00 from holding Regal Investment or generate 40.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collins Foods vs. Regal Investment
Performance |
| Timeline |
| Collins Foods |
| Regal Investment |
Collins Foods and Regal Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Regal Investment
The main advantage of trading using opposite Collins Foods and Regal Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods 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.| Collins Foods vs. Summit Resources Limited | Collins Foods vs. Ecofibre | Collins Foods vs. iShares Global Healthcare | Collins Foods vs. Adriatic Metals Plc |
| Regal Investment vs. Autosports Group | Regal Investment vs. Srj Technologies Group | Regal Investment vs. Neurotech International | Regal Investment vs. EROAD |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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