Correlation Between Aussie Broadband and Regal Investment

Can any of the company-specific risk be diversified away by investing in both Aussie Broadband and Regal Investment 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 Aussie Broadband and Regal Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aussie Broadband and Regal Investment, you can compare the effects of market volatilities on Aussie Broadband and Regal Investment 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 Aussie Broadband with a short position of Regal Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aussie Broadband and Regal Investment.

Diversification Opportunities for Aussie Broadband and Regal Investment

0.12

Correlation Coefficient

Aussie Broadband  Regal Investment

Average diversification

The 3 months correlation between Aussie and Regal is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Aussie Broadband and Regal Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regal Investment and Aussie Broadband 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 Aussie Broadband are associated (or correlated) with Regal Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regal Investment has no effect on the direction of Aussie Broadband i.e., Aussie Broadband and Regal Investment go up and down completely randomly.

Pair Corralation between Aussie Broadband and Regal Investment

Assuming the 90 days trading horizon Aussie Broadband is expected to under-perform the Regal Investment. In addition to that, Aussie Broadband is 1.05 times more volatile than Regal Investment. It trades about -0.34 of its total potential returns per unit of risk. Regal Investment is currently generating about -0.05 per unit of volatility. If you would invest  330.00  in Regal Investment on October 8, 2024 and sell it today you would lose (2.00) from holding Regal Investment or give up 0.61% of portfolio value over 90 days.

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

Aussie Broadband  vs.  Regal Investment

Aussie Broadband

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aussie Broadband has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Aussie Broadband is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Regal Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Regal Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Regal Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aussie Broadband and Regal Investment

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

The idea behind Aussie Broadband and Regal Investment 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.