Correlation Between Aquagold International and Optimum Small-mid

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

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

Diversification Opportunities for Aquagold International and Optimum Small-mid

0.85

Correlation Coefficient

Aquagold International  Optimum Small-mid

Very poor diversification

The 3 months correlation between Aquagold and Optimum is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Optimum Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimum Small Mid 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 Optimum Small-mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimum Small Mid has no effect on the direction of Aquagold International i.e., Aquagold International and Optimum Small-mid go up and down completely randomly.

Pair Corralation between Aquagold International and Optimum Small-mid

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Optimum Small-mid. In addition to that, Aquagold International is 9.78 times more volatile than Optimum Small Mid Cap. It trades about -0.17 of its total potential returns per unit of risk. Optimum Small Mid Cap is currently generating about -0.21 per unit of volatility. If you would invest  1,287  in Optimum Small Mid Cap on December 2, 2024 and sell it today you would lose (207.00) from holding Optimum Small Mid Cap or give up 16.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.31%
Values	Daily Returns

Aquagold International  vs.  Optimum Small Mid Cap

Aquagold International

Risk-Adjusted Performance

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 April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Optimum Small Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Optimum Small Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Aquagold International and Optimum Small-mid

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

The idea behind Aquagold International and Optimum Small Mid Cap 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.