Correlation Between Aquarius Engines and Itay Financial

Can any of the company-specific risk be diversified away by investing in both Aquarius Engines and Itay Financial 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 Itay Financial 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 Itay Financial AA, you can compare the effects of market volatilities on Aquarius Engines and Itay Financial 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 Itay Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquarius Engines and Itay Financial.

Diversification Opportunities for Aquarius Engines and Itay Financial

-0.75

Correlation Coefficient

Aquarius Engines  Itay Financial

Pay attention - limited upside

The 3 months correlation between Aquarius and Itay is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Aquarius Engines AM and Itay Financial AA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itay Financial AA 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 Itay Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itay Financial AA has no effect on the direction of Aquarius Engines i.e., Aquarius Engines and Itay Financial go up and down completely randomly.

Pair Corralation between Aquarius Engines and Itay Financial

Assuming the 90 days trading horizon Aquarius Engines AM is expected to under-perform the Itay Financial. But the stock apears to be less risky and, when comparing its historical volatility, Aquarius Engines AM is 7.72 times less risky than Itay Financial. The stock trades about -0.02 of its potential returns per unit of risk. The Itay Financial AA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  10,900  in Itay Financial AA on September 12, 2024 and sell it today you would earn a total of  24,300  from holding Itay Financial AA or generate 222.94% 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.  Itay Financial AA

Aquarius Engines

Risk-Adjusted Performance

0 of 100

Very Weak

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

Itay Financial AA

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Itay Financial AA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Itay Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aquarius Engines and Itay Financial

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

The idea behind Aquarius Engines AM and Itay Financial AA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.