Correlation Between REGAL ASIAN and Xero
Can any of the company-specific risk be diversified away by investing in both REGAL ASIAN and Xero 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 Xero 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 Xero, you can compare the effects of market volatilities on REGAL ASIAN and Xero 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 Xero. Check out your portfolio center. Please also check ongoing floating volatility patterns of REGAL ASIAN and Xero.
Diversification Opportunities for REGAL ASIAN and Xero
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between REGAL and Xero is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding REGAL ASIAN INVESTMENTS and Xero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xero 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 Xero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xero has no effect on the direction of REGAL ASIAN i.e., REGAL ASIAN and Xero go up and down completely randomly.
Pair Corralation between REGAL ASIAN and Xero
Assuming the 90 days trading horizon REGAL ASIAN INVESTMENTS is expected to under-perform the Xero. But the stock apears to be less risky and, when comparing its historical volatility, REGAL ASIAN INVESTMENTS is 1.34 times less risky than Xero. The stock trades about -0.29 of its potential returns per unit of risk. The Xero is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 16,155 in Xero on September 14, 2024 and sell it today you would earn a total of 945.00 from holding Xero or generate 5.85% 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. Xero
Performance |
| Timeline |
| REGAL ASIAN INVESTMENTS |
| Xero |
REGAL ASIAN and Xero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REGAL ASIAN and Xero
The main advantage of trading using opposite REGAL ASIAN and Xero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REGAL ASIAN position performs unexpectedly, Xero 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 Xero will offset losses from the drop in Xero's long position.| REGAL ASIAN vs. Westpac Banking | REGAL ASIAN vs. ABACUS STORAGE KING | REGAL ASIAN vs. Odyssey Energy | REGAL ASIAN vs. Sims |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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