Correlation Between REGAL ASIAN and Aeris Environmental
Can any of the company-specific risk be diversified away by investing in both REGAL ASIAN and Aeris Environmental 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 ASIAN and Aeris Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REGAL ASIAN INVESTMENTS and Aeris Environmental, you can compare the effects of market volatilities on REGAL ASIAN and Aeris Environmental 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 ASIAN with a short position of Aeris Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of REGAL ASIAN and Aeris Environmental.
Diversification Opportunities for REGAL ASIAN and Aeris Environmental
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between REGAL and Aeris is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding REGAL ASIAN INVESTMENTS and Aeris Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeris Environmental and REGAL ASIAN 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 ASIAN INVESTMENTS are associated (or correlated) with Aeris Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeris Environmental has no effect on the direction of REGAL ASIAN i.e., REGAL ASIAN and Aeris Environmental go up and down completely randomly.
Pair Corralation between REGAL ASIAN and Aeris Environmental
Assuming the 90 days trading horizon REGAL ASIAN INVESTMENTS is expected to under-perform the Aeris Environmental. But the stock apears to be less risky and, when comparing its historical volatility, REGAL ASIAN INVESTMENTS is 2.33 times less risky than Aeris Environmental. The stock trades about -0.32 of its potential returns per unit of risk. The Aeris Environmental is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 9.00 in Aeris Environmental on September 12, 2024 and sell it today you would lose (0.50) from holding Aeris Environmental or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REGAL ASIAN INVESTMENTS vs. Aeris Environmental
Performance |
| Timeline |
| REGAL ASIAN INVESTMENTS |
| Aeris Environmental |
REGAL ASIAN and Aeris Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REGAL ASIAN and Aeris Environmental
The main advantage of trading using opposite REGAL ASIAN and Aeris Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REGAL ASIAN position performs unexpectedly, Aeris Environmental 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 Aeris Environmental will offset losses from the drop in Aeris Environmental's long position.| REGAL ASIAN vs. EVE Health Group | REGAL ASIAN vs. Apiam Animal Health | REGAL ASIAN vs. WiseTech Global Limited | REGAL ASIAN vs. Regis Healthcare |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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