Correlation Between Aqua Metals and Garb Oil

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

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

Diversification Opportunities for Aqua Metals and Garb Oil

0.0

Correlation Coefficient

Aqua Metals  Garb Oil

Pay attention - limited upside

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

Pair Corralation between Aqua Metals and Garb Oil

Given the investment horizon of 90 days Aqua Metals is expected to under-perform the Garb Oil. In addition to that, Aqua Metals is 1.17 times more volatile than Garb Oil Pwr. It trades about -0.07 of its total potential returns per unit of risk. Garb Oil Pwr is currently generating about -0.05 per unit of volatility. If you would invest  0.01  in Garb Oil Pwr on October 3, 2024 and sell it today you would lose (0.01) from holding Garb Oil Pwr or give up 100.0% of portfolio value over 90 days.

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

Aqua Metals  vs.  Garb Oil Pwr

Aqua Metals

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Aqua Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Garb Oil Pwr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Garb Oil Pwr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Garb Oil is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aqua Metals and Garb Oil

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

The idea behind Aqua Metals and Garb Oil Pwr 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.