Correlation Between Aqua Power and Oncologix Tech

Can any of the company-specific risk be diversified away by investing in both Aqua Power and Oncologix Tech 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 Aqua Power and Oncologix Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aqua Power Systems and Oncologix Tech, you can compare the effects of market volatilities on Aqua Power and Oncologix Tech 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 Aqua Power with a short position of Oncologix Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqua Power and Oncologix Tech.

Diversification Opportunities for Aqua Power and Oncologix Tech

0.0

Correlation Coefficient

Aqua Power  Oncologix Tech

Pay attention - limited upside

The 3 months correlation between Aqua and Oncologix is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aqua Power Systems and Oncologix Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oncologix Tech and Aqua Power 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 Aqua Power Systems are associated (or correlated) with Oncologix Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oncologix Tech has no effect on the direction of Aqua Power i.e., Aqua Power and Oncologix Tech go up and down completely randomly.

Pair Corralation between Aqua Power and Oncologix Tech

Given the investment horizon of 90 days Aqua Power is expected to generate 1.21 times less return on investment than Oncologix Tech. In addition to that, Aqua Power is 1.06 times more volatile than Oncologix Tech. It trades about 0.03 of its total potential returns per unit of risk. Oncologix Tech is currently generating about 0.04 per unit of volatility. If you would invest  0.10  in Oncologix Tech on December 5, 2024 and sell it today you would lose (0.09) from holding Oncologix Tech or give up 90.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.2%
Values	Daily Returns

Aqua Power Systems  vs.  Oncologix Tech

Aqua Power Systems

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aqua Power Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Aqua Power demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Oncologix Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oncologix Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Oncologix Tech is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Aqua Power and Oncologix Tech

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

The idea behind Aqua Power Systems and Oncologix Tech 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.