Correlation Between Aquagold International and Royce Micro

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

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

Diversification Opportunities for Aquagold International and Royce Micro

-0.01

Correlation Coefficient

Aquagold International  Royce Micro

Good diversification

The 3 months correlation between Aquagold and Royce is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Royce Micro Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royce Micro Cap 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 Royce Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royce Micro Cap has no effect on the direction of Aquagold International i.e., Aquagold International and Royce Micro go up and down completely randomly.

Pair Corralation between Aquagold International and Royce Micro

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Royce Micro. In addition to that, Aquagold International is 20.65 times more volatile than Royce Micro Cap. It trades about -0.22 of its total potential returns per unit of risk. Royce Micro Cap is currently generating about -0.23 per unit of volatility. If you would invest  1,012  in Royce Micro Cap on September 25, 2024 and sell it today you would lose (47.00) from holding Royce Micro Cap or give up 4.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aquagold International  vs.  Royce Micro Cap

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

Royce Micro Cap

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Royce Micro Cap are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, Royce Micro is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aquagold International and Royce Micro

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

The idea behind Aquagold International and Royce Micro 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.