Correlation Between Aqua Public and Big Camera

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

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

Diversification Opportunities for Aqua Public and Big Camera

0.84

Correlation Coefficient

Aqua Public  Big Camera

Very poor diversification

The 3 months correlation between Aqua and Big is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Aqua Public and Big Camera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Camera and Aqua Public 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 Public are associated (or correlated) with Big Camera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Camera has no effect on the direction of Aqua Public i.e., Aqua Public and Big Camera go up and down completely randomly.

Pair Corralation between Aqua Public and Big Camera

Assuming the 90 days trading horizon Aqua Public is expected to generate 0.61 times more return on investment than Big Camera. However, Aqua Public is 1.65 times less risky than Big Camera. It trades about -0.07 of its potential returns per unit of risk. Big Camera is currently generating about -0.21 per unit of risk. If you would invest  33.00  in Aqua Public on October 4, 2024 and sell it today you would lose (1.00) from holding Aqua Public or give up 3.03% of portfolio value over 90 days.

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

Aqua Public  vs.  Big Camera

Aqua Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aqua Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Big Camera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Big Camera has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Aqua Public and Big Camera

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

The idea behind Aqua Public and Big Camera 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.