Correlation Between Aquarius Engines and Highcon Systems

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

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

Diversification Opportunities for Aquarius Engines and Highcon Systems

-0.79

Correlation Coefficient

Aquarius Engines  Highcon Systems

Pay attention - limited upside

The 3 months correlation between Aquarius and Highcon is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Aquarius Engines AM and Highcon Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highcon Systems and Aquarius Engines 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 Aquarius Engines AM are associated (or correlated) with Highcon Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highcon Systems has no effect on the direction of Aquarius Engines i.e., Aquarius Engines and Highcon Systems go up and down completely randomly.

Pair Corralation between Aquarius Engines and Highcon Systems

Assuming the 90 days trading horizon Aquarius Engines AM is expected to generate 0.9 times more return on investment than Highcon Systems. However, Aquarius Engines AM is 1.11 times less risky than Highcon Systems. It trades about 0.16 of its potential returns per unit of risk. Highcon Systems is currently generating about -0.15 per unit of risk. If you would invest  11,350  in Aquarius Engines AM on November 29, 2024 and sell it today you would earn a total of  8,440  from holding Aquarius Engines AM or generate 74.36% return on investment over 90 days.

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

Aquarius Engines AM  vs.  Highcon Systems

Aquarius Engines

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aquarius Engines AM are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aquarius Engines sustained solid returns over the last few months and may actually be approaching a breakup point.

Highcon Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Highcon Systems 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 basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Aquarius Engines and Highcon Systems

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

The idea behind Aquarius Engines AM and Highcon Systems 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.