Correlation Between General Engineering and Aqua Public
Can any of the company-specific risk be diversified away by investing in both General Engineering 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 General Engineering and Aqua Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Engineering Public and Aqua Public, you can compare the effects of market volatilities on General Engineering 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 General Engineering with a short position of Aqua Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Engineering and Aqua Public.
Diversification Opportunities for General Engineering and Aqua Public
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between General and Aqua is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding General Engineering Public and Aqua Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua Public and General Engineering 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 General Engineering Public 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 General Engineering i.e., General Engineering and Aqua Public go up and down completely randomly.
Pair Corralation between General Engineering and Aqua Public
Assuming the 90 days trading horizon General Engineering is expected to generate 1.05 times less return on investment than Aqua Public. In addition to that, General Engineering is 1.01 times more volatile than Aqua Public. It trades about 0.06 of its total potential returns per unit of risk. Aqua Public is currently generating about 0.06 per unit of volatility. If you would invest 35.00 in Aqua Public on September 4, 2024 and sell it today you would lose (2.00) from holding Aqua Public or give up 5.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.58% |
| Values | Daily Returns |
General Engineering Public vs. Aqua Public
Performance |
| Timeline |
| General Engineering |
| Aqua Public |
General Engineering and Aqua Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Engineering and Aqua Public
The main advantage of trading using opposite General Engineering and Aqua Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Engineering 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.| General Engineering vs. Dcon Products Public | General Engineering vs. Eastern Star Real | General Engineering vs. Chonburi Concrete Product | General Engineering vs. Eastern Polymer 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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