Correlation Between Volkswagen and Aqua Power
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Aqua Power 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 Volkswagen and Aqua Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG Pref and Aqua Power Systems, you can compare the effects of market volatilities on Volkswagen and Aqua Power 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 Volkswagen with a short position of Aqua Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Aqua Power.
Diversification Opportunities for Volkswagen and Aqua Power
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Volkswagen and Aqua is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG Pref and Aqua Power Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua Power Systems and Volkswagen 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 Volkswagen AG Pref are associated (or correlated) with Aqua Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua Power Systems has no effect on the direction of Volkswagen i.e., Volkswagen and Aqua Power go up and down completely randomly.
Pair Corralation between Volkswagen and Aqua Power
Assuming the 90 days horizon Volkswagen AG Pref is expected to under-perform the Aqua Power. But the pink sheet apears to be less risky and, when comparing its historical volatility, Volkswagen AG Pref is 8.57 times less risky than Aqua Power. The pink sheet trades about -0.19 of its potential returns per unit of risk. The Aqua Power Systems is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 0.90 in Aqua Power Systems on September 3, 2024 and sell it today you would earn a total of 1.60 from holding Aqua Power Systems or generate 177.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG Pref vs. Aqua Power Systems
Performance |
| Timeline |
| Volkswagen AG Pref |
| Aqua Power Systems |
Volkswagen and Aqua Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Aqua Power
The main advantage of trading using opposite Volkswagen and Aqua Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Aqua Power 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 Aqua Power will offset losses from the drop in Aqua Power's long position.| Volkswagen vs. Porsche Automobil Holding | Volkswagen vs. Porsche Automobile Holding | Volkswagen vs. Volkswagen AG 110 | Volkswagen vs. Bayerische Motoren Werke |
| Aqua Power vs. Manaris Corp | Aqua Power vs. Green Planet Bio | Aqua Power vs. Continental Beverage Brands | Aqua Power vs. Opus Magnum Ameris |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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