Correlation Between REGAL ASIAN and COMMONWBK AUSTRSPADRS

Can any of the company-specific risk be diversified away by investing in both REGAL ASIAN and COMMONWBK AUSTRSPADRS 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 COMMONWBK AUSTRSPADRS 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 COMMONWBK AUSTRSPADRS, you can compare the effects of market volatilities on REGAL ASIAN and COMMONWBK AUSTRSPADRS 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 COMMONWBK AUSTRSPADRS. Check out your portfolio center. Please also check ongoing floating volatility patterns of REGAL ASIAN and COMMONWBK AUSTRSPADRS.

Diversification Opportunities for REGAL ASIAN and COMMONWBK AUSTRSPADRS

0.02

Correlation Coefficient

REGAL ASIAN  COMMONWBK AUSTRSPADRS

Significant diversification

The 3 months correlation between REGAL and COMMONWBK is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding REGAL ASIAN INVESTMENTS and COMMONWBK AUSTRSPADRS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMMONWBK AUSTRSPADRS 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 COMMONWBK AUSTRSPADRS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMMONWBK AUSTRSPADRS has no effect on the direction of REGAL ASIAN i.e., REGAL ASIAN and COMMONWBK AUSTRSPADRS go up and down completely randomly.

Pair Corralation between REGAL ASIAN and COMMONWBK AUSTRSPADRS

Assuming the 90 days trading horizon REGAL ASIAN is expected to generate 2.13 times less return on investment than COMMONWBK AUSTRSPADRS. In addition to that, REGAL ASIAN is 1.42 times more volatile than COMMONWBK AUSTRSPADRS. It trades about 0.05 of its total potential returns per unit of risk. COMMONWBK AUSTRSPADRS is currently generating about 0.14 per unit of volatility. If you would invest  8,550  in COMMONWBK AUSTRSPADRS on September 12, 2024 and sell it today you would earn a total of  950.00  from holding COMMONWBK AUSTRSPADRS or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

REGAL ASIAN INVESTMENTS  vs.  COMMONWBK AUSTRSPADRS

REGAL ASIAN INVESTMENTS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in REGAL ASIAN INVESTMENTS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, REGAL ASIAN is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

COMMONWBK AUSTRSPADRS

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in COMMONWBK AUSTRSPADRS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, COMMONWBK AUSTRSPADRS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with REGAL ASIAN and COMMONWBK AUSTRSPADRS

The main advantage of trading using opposite REGAL ASIAN and COMMONWBK AUSTRSPADRS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REGAL ASIAN position performs unexpectedly, COMMONWBK AUSTRSPADRS 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 COMMONWBK AUSTRSPADRS will offset losses from the drop in COMMONWBK AUSTRSPADRS's long position.

The idea behind REGAL ASIAN INVESTMENTS and COMMONWBK AUSTRSPADRS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.