Correlation Between Aquagold International and New World

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

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

Diversification Opportunities for Aquagold International and New World

0.7

Correlation Coefficient

Aquagold International  New World

Poor diversification

The 3 months correlation between Aquagold and New is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and New World Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New World Development 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 New World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New World Development has no effect on the direction of Aquagold International i.e., Aquagold International and New World go up and down completely randomly.

Pair Corralation between Aquagold International and New World

Given the investment horizon of 90 days Aquagold International is expected to under-perform the New World. In addition to that, Aquagold International is 1.83 times more volatile than New World Development. It trades about -0.13 of its total potential returns per unit of risk. New World Development is currently generating about -0.09 per unit of volatility. If you would invest  53.00  in New World Development on October 23, 2024 and sell it today you would lose (20.00) from holding New World Development or give up 37.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Aquagold International  vs.  New World Development

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.

New World Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New World Development 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 essential indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Aquagold International and New World

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

The idea behind Aquagold International and New World Development 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.