Correlation Between Aquagold International and Parametric Commodity

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Can any of the company-specific risk be diversified away by investing in both Aquagold International and Parametric Commodity 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 Parametric Commodity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aquagold International and Parametric Modity Strategy, you can compare the effects of market volatilities on Aquagold International and Parametric Commodity 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 Parametric Commodity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and Parametric Commodity.

Diversification Opportunities for Aquagold International and Parametric Commodity

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Aquagold and Parametric is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Parametric Modity Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parametric Commodity 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 Parametric Commodity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parametric Commodity has no effect on the direction of Aquagold International i.e., Aquagold International and Parametric Commodity go up and down completely randomly.

Pair Corralation between Aquagold International and Parametric Commodity

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Parametric Commodity. In addition to that, Aquagold International is 11.28 times more volatile than Parametric Modity Strategy. It trades about -0.13 of its total potential returns per unit of risk. Parametric Modity Strategy is currently generating about -0.07 per unit of volatility. If you would invest  652.00  in Parametric Modity Strategy on October 9, 2024 and sell it today you would lose (33.00) from holding Parametric Modity Strategy or give up 5.06% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Aquagold International  vs.  Parametric Modity Strategy

 Performance 
       Timeline  
Aquagold International 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Parametric Commodity 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Parametric Modity Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Parametric Commodity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aquagold International and Parametric Commodity Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aquagold International and Parametric Commodity

The main advantage of trading using opposite Aquagold International and Parametric Commodity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International position performs unexpectedly, Parametric Commodity 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 Parametric Commodity will offset losses from the drop in Parametric Commodity's long position.
The idea behind Aquagold International and Parametric Modity Strategy 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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