Correlation Between Aquagold International and Arax Holdings

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

By analyzing existing cross correlation between Aquagold International and Arax Holdings Corp, you can compare the effects of market volatilities on Aquagold International and Arax Holdings 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 Arax Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and Arax Holdings.

Diversification Opportunities for Aquagold International and Arax Holdings

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Correlation Coefficient

Aquagold International  Arax Holdings

Pay attention - limited upside

The 3 months correlation between Aquagold and Arax is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Arax Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arax Holdings Corp 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 Arax Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arax Holdings Corp has no effect on the direction of Aquagold International i.e., Aquagold International and Arax Holdings go up and down completely randomly.

Pair Corralation between Aquagold International and Arax Holdings

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Arax Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Aquagold International is 2.21 times less risky than Arax Holdings. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Arax Holdings Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  170.00  in Arax Holdings Corp on September 13, 2024 and sell it today you would lose (117.00) from holding Arax Holdings Corp or give up 68.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aquagold International  vs.  Arax Holdings Corp

Aquagold International

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Aquagold International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Arax Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arax Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Aquagold International and Arax Holdings

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

The idea behind Aquagold International and Arax Holdings Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.