Correlation Between Aqua Public and BuilderSmart Public

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

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

Diversification Opportunities for Aqua Public and BuilderSmart Public

0.8

Correlation Coefficient

Aqua Public  BuilderSmart Public

Very poor diversification

The 3 months correlation between Aqua and BuilderSmart is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Aqua Public and BuilderSmart Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BuilderSmart Public 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 BuilderSmart Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BuilderSmart Public has no effect on the direction of Aqua Public i.e., Aqua Public and BuilderSmart Public go up and down completely randomly.

Pair Corralation between Aqua Public and BuilderSmart Public

Assuming the 90 days trading horizon Aqua Public is expected to under-perform the BuilderSmart Public. In addition to that, Aqua Public is 1.99 times more volatile than BuilderSmart Public. It trades about -0.15 of its total potential returns per unit of risk. BuilderSmart Public is currently generating about -0.23 per unit of volatility. If you would invest  178.00  in BuilderSmart Public on October 11, 2024 and sell it today you would lose (8.00) from holding BuilderSmart Public or give up 4.49% 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.  BuilderSmart Public

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 latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

BuilderSmart Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BuilderSmart Public 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 primary 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 BuilderSmart Public

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

The idea behind Aqua Public and BuilderSmart Public 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.