Correlation Between Regal Investment and Rea
Can any of the company-specific risk be diversified away by investing in both Regal Investment and Rea 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 Rea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regal Investment and Rea Group, you can compare the effects of market volatilities on Regal Investment and Rea 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 Rea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regal Investment and Rea.
Diversification Opportunities for Regal Investment and Rea
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Regal and Rea is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Regal Investment and Rea Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rea Group 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 Rea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rea Group has no effect on the direction of Regal Investment i.e., Regal Investment and Rea go up and down completely randomly.
Pair Corralation between Regal Investment and Rea
Assuming the 90 days trading horizon Regal Investment is expected to generate 0.33 times more return on investment than Rea. However, Regal Investment is 3.05 times less risky than Rea. It trades about 0.02 of its potential returns per unit of risk. Rea Group is currently generating about -0.07 per unit of risk. If you would invest 333.00 in Regal Investment on November 27, 2024 and sell it today you would earn a total of 1.00 from holding Regal Investment or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regal Investment vs. Rea Group
Performance |
| Timeline |
| Regal Investment |
| Rea Group |
Regal Investment and Rea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regal Investment and Rea
The main advantage of trading using opposite Regal Investment and Rea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regal Investment position performs unexpectedly, Rea 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 Rea will offset losses from the drop in Rea's long position.| Regal Investment vs. Step One Clothing | Regal Investment vs. Champion Iron | Regal Investment vs. Aeris Environmental | Regal Investment vs. Cleanspace Holdings |
| Rea vs. Carawine Resources Limited | Rea vs. Complii FinTech Solutions | Rea vs. Beston Global Food | Rea vs. Ainsworth Game Technology |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |