Correlation Between Aquagold International and LJIM

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

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

Diversification Opportunities for Aquagold International and LJIM

-0.49

Correlation Coefficient

Aquagold International  LJIM

Very good diversification

The 3 months correlation between Aquagold and LJIM is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and LJIM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LJIM 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 LJIM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LJIM has no effect on the direction of Aquagold International i.e., Aquagold International and LJIM go up and down completely randomly.

Pair Corralation between Aquagold International and LJIM

If you would invest  2,852  in LJIM on October 3, 2024 and sell it today you would earn a total of  0.00  from holding LJIM or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Aquagold International  vs.  LJIM

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.

LJIM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LJIM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, LJIM is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Aquagold International and LJIM

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

The idea behind Aquagold International and LJIM 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.