Correlation Between Aquagold International and Gateway Equity

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

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

Diversification Opportunities for Aquagold International and Gateway Equity

-0.23

Correlation Coefficient

Aquagold International  Gateway Equity

Very good diversification

The 3 months correlation between Aquagold and Gateway is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Gateway Equity Call in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gateway Equity Call 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 Gateway Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gateway Equity Call has no effect on the direction of Aquagold International i.e., Aquagold International and Gateway Equity go up and down completely randomly.

Pair Corralation between Aquagold International and Gateway Equity

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Gateway Equity. In addition to that, Aquagold International is 12.81 times more volatile than Gateway Equity Call. It trades about -0.06 of its total potential returns per unit of risk. Gateway Equity Call is currently generating about 0.11 per unit of volatility. If you would invest  1,642  in Gateway Equity Call on October 4, 2024 and sell it today you would earn a total of  336.00  from holding Gateway Equity Call or generate 20.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.7%
Values	Daily Returns

Aquagold International  vs.  Gateway Equity Call

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.

Gateway Equity Call

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gateway Equity Call are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gateway Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aquagold International and Gateway Equity

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

The idea behind Aquagold International and Gateway Equity Call 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..