Correlation Between Aquagold International and Acerinox

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

By analyzing existing cross correlation between Aquagold International and Acerinox SA ADR, you can compare the effects of market volatilities on Aquagold International and Acerinox 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 Aquagold International with a short position of Acerinox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and Acerinox.

Diversification Opportunities for Aquagold International and Acerinox

0.21

Correlation Coefficient

Aquagold International  Acerinox

Modest diversification

The 3 months correlation between Aquagold and Acerinox is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Acerinox SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acerinox SA ADR and Aquagold International 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 Aquagold International are associated (or correlated) with Acerinox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acerinox SA ADR has no effect on the direction of Aquagold International i.e., Aquagold International and Acerinox go up and down completely randomly.

Pair Corralation between Aquagold International and Acerinox

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Acerinox. In addition to that, Aquagold International is 2.96 times more volatile than Acerinox SA ADR. It trades about -0.03 of its total potential returns per unit of risk. Acerinox SA ADR is currently generating about 0.0 per unit of volatility. If you would invest  521.00  in Acerinox SA ADR on October 7, 2024 and sell it today you would lose (31.00) from holding Acerinox SA ADR or give up 5.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Aquagold International  vs.  Acerinox SA ADR

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International 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 fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Acerinox SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acerinox SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Acerinox is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aquagold International and Acerinox

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

The idea behind Aquagold International and Acerinox SA ADR 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.