Correlation Between Iridium Communications and REGAL ASIAN

Can any of the company-specific risk be diversified away by investing in both Iridium Communications and REGAL ASIAN 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 Iridium Communications and REGAL ASIAN into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Iridium Communications and REGAL ASIAN INVESTMENTS, you can compare the effects of market volatilities on Iridium Communications and REGAL ASIAN 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 Iridium Communications with a short position of REGAL ASIAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and REGAL ASIAN.

Diversification Opportunities for Iridium Communications and REGAL ASIAN

-0.28

Correlation Coefficient

Iridium Communications  REGAL ASIAN

Very good diversification

The 3 months correlation between Iridium and REGAL is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and REGAL ASIAN INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REGAL ASIAN INVESTMENTS and Iridium Communications 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 Iridium Communications are associated (or correlated) with REGAL ASIAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REGAL ASIAN INVESTMENTS has no effect on the direction of Iridium Communications i.e., Iridium Communications and REGAL ASIAN go up and down completely randomly.

Pair Corralation between Iridium Communications and REGAL ASIAN

Assuming the 90 days horizon Iridium Communications is expected to generate 3.37 times less return on investment than REGAL ASIAN. But when comparing it to its historical volatility, Iridium Communications is 1.1 times less risky than REGAL ASIAN. It trades about 0.03 of its potential returns per unit of risk. REGAL ASIAN INVESTMENTS is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  122.00  in REGAL ASIAN INVESTMENTS on October 9, 2024 and sell it today you would earn a total of  3.00  from holding REGAL ASIAN INVESTMENTS or generate 2.46% return on investment over 90 days.

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

Iridium Communications  vs.  REGAL ASIAN INVESTMENTS

Iridium Communications

Risk-Adjusted Performance

5 of 100

Modest

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

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.

Pair Trading with Iridium Communications and REGAL ASIAN

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

The idea behind Iridium Communications and REGAL ASIAN INVESTMENTS 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..