Correlation Between REGAL ASIAN and WA Kaolin
Can any of the company-specific risk be diversified away by investing in both REGAL ASIAN and WA Kaolin 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 WA Kaolin 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 WA Kaolin, you can compare the effects of market volatilities on REGAL ASIAN and WA Kaolin 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 WA Kaolin. Check out your portfolio center. Please also check ongoing floating volatility patterns of REGAL ASIAN and WA Kaolin.
Diversification Opportunities for REGAL ASIAN and WA Kaolin
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between REGAL and WAK is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding REGAL ASIAN INVESTMENTS and WA Kaolin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WA Kaolin 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 WA Kaolin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WA Kaolin has no effect on the direction of REGAL ASIAN i.e., REGAL ASIAN and WA Kaolin go up and down completely randomly.
Pair Corralation between REGAL ASIAN and WA Kaolin
Assuming the 90 days trading horizon REGAL ASIAN INVESTMENTS is expected to under-perform the WA Kaolin. But the stock apears to be less risky and, when comparing its historical volatility, REGAL ASIAN INVESTMENTS is 2.66 times less risky than WA Kaolin. The stock trades about -0.34 of its potential returns per unit of risk. The WA Kaolin is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 4.90 in WA Kaolin on September 13, 2024 and sell it today you would earn a total of 0.90 from holding WA Kaolin or generate 18.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REGAL ASIAN INVESTMENTS vs. WA Kaolin
Performance |
| Timeline |
| REGAL ASIAN INVESTMENTS |
| WA Kaolin |
REGAL ASIAN and WA Kaolin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REGAL ASIAN and WA Kaolin
The main advantage of trading using opposite REGAL ASIAN and WA Kaolin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REGAL ASIAN position performs unexpectedly, WA Kaolin 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 WA Kaolin will offset losses from the drop in WA Kaolin's long position.| REGAL ASIAN vs. Skycity Entertainment Group | REGAL ASIAN vs. COAST ENTERTAINMENT HOLDINGS | REGAL ASIAN vs. Alto Metals | REGAL ASIAN vs. Dalaroo Metals |
| WA Kaolin vs. Carnegie Clean Energy | WA Kaolin vs. Lendlease Group | WA Kaolin vs. Aurelia Metals | WA Kaolin vs. Super Retail Group |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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