Correlation Between Regal Investment and Air New
Can any of the company-specific risk be diversified away by investing in both Regal Investment and Air New 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 Regal Investment and Air New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regal Investment and Air New Zealand, you can compare the effects of market volatilities on Regal Investment and Air New 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 Regal Investment with a short position of Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regal Investment and Air New.
Diversification Opportunities for Regal Investment and Air New
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Regal and Air is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Regal Investment and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand and Regal Investment 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 Regal Investment are associated (or correlated) with Air New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of Regal Investment i.e., Regal Investment and Air New go up and down completely randomly.
Pair Corralation between Regal Investment and Air New
Assuming the 90 days trading horizon Regal Investment is expected to generate 19.53 times less return on investment than Air New. In addition to that, Regal Investment is 1.13 times more volatile than Air New Zealand. It trades about 0.01 of its total potential returns per unit of risk. Air New Zealand is currently generating about 0.15 per unit of volatility. If you would invest 48.00 in Air New Zealand on August 29, 2024 and sell it today you would earn a total of 2.00 from holding Air New Zealand or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regal Investment vs. Air New Zealand
Performance |
| Timeline |
| Regal Investment |
| Air New Zealand |
Regal Investment and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regal Investment and Air New
The main advantage of trading using opposite Regal Investment and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regal Investment position performs unexpectedly, Air New 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 Air New will offset losses from the drop in Air New's long position.| Regal Investment vs. Autosports Group | Regal Investment vs. Srj Technologies Group | Regal Investment vs. Neurotech International | Regal Investment vs. EROAD |
| Air New vs. Macquarie Group | Air New vs. Macquarie Group Ltd | Air New vs. Commonwealth Bank | Air New vs. Rio Tinto |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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