Correlation Between Advanced Braking and Rubicon Water

Can any of the company-specific risk be diversified away by investing in both Advanced Braking and Rubicon Water 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 Advanced Braking and Rubicon Water into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Advanced Braking Technology and Rubicon Water, you can compare the effects of market volatilities on Advanced Braking and Rubicon Water 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 Advanced Braking with a short position of Rubicon Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Braking and Rubicon Water.

Diversification Opportunities for Advanced Braking and Rubicon Water

0.29

Correlation Coefficient

Advanced Braking  Rubicon Water

Modest diversification

The 3 months correlation between Advanced and Rubicon is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Braking Technology and Rubicon Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubicon Water and Advanced Braking 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 Advanced Braking Technology are associated (or correlated) with Rubicon Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubicon Water has no effect on the direction of Advanced Braking i.e., Advanced Braking and Rubicon Water go up and down completely randomly.

Pair Corralation between Advanced Braking and Rubicon Water

Assuming the 90 days trading horizon Advanced Braking is expected to generate 1.04 times less return on investment than Rubicon Water. But when comparing it to its historical volatility, Advanced Braking Technology is 1.72 times less risky than Rubicon Water. It trades about 0.07 of its potential returns per unit of risk. Rubicon Water is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  34.00  in Rubicon Water on October 24, 2024 and sell it today you would earn a total of  2.00  from holding Rubicon Water or generate 5.88% return on investment over 90 days.

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

Advanced Braking Technology  vs.  Rubicon Water

Advanced Braking Tec

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Braking Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Advanced Braking may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Rubicon Water

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rubicon Water are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Rubicon Water may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Advanced Braking and Rubicon Water

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

The idea behind Advanced Braking Technology and Rubicon Water 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.