Correlation Between REGAL ASIAN and ADHI KARYA

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

Diversification Opportunities for REGAL ASIAN and ADHI KARYA

-0.14

Correlation Coefficient

REGAL ASIAN  ADHI KARYA

Good diversification

The 3 months correlation between REGAL and ADHI is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding REGAL ASIAN INVESTMENTS and ADHI KARYA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADHI KARYA 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 ADHI KARYA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADHI KARYA has no effect on the direction of REGAL ASIAN i.e., REGAL ASIAN and ADHI KARYA go up and down completely randomly.

Pair Corralation between REGAL ASIAN and ADHI KARYA

Assuming the 90 days trading horizon REGAL ASIAN INVESTMENTS is expected to under-perform the ADHI KARYA. But the stock apears to be less risky and, when comparing its historical volatility, REGAL ASIAN INVESTMENTS is 9.15 times less risky than ADHI KARYA. The stock trades about -0.42 of its potential returns per unit of risk. The ADHI KARYA is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1.25  in ADHI KARYA on September 22, 2024 and sell it today you would lose (0.30) from holding ADHI KARYA or give up 24.0% of portfolio value over 90 days.

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

REGAL ASIAN INVESTMENTS  vs.  ADHI KARYA

REGAL ASIAN INVESTMENTS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days REGAL ASIAN INVESTMENTS has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

ADHI KARYA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ADHI KARYA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, ADHI KARYA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with REGAL ASIAN and ADHI KARYA

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

The idea behind REGAL ASIAN INVESTMENTS and ADHI KARYA 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..