Correlation Between Aquagold International and Strat Petroleum

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

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

Diversification Opportunities for Aquagold International and Strat Petroleum

0.0

Correlation Coefficient

Aquagold International  Strat Petroleum

Pay attention - limited upside

The 3 months correlation between Aquagold and Strat is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Strat Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strat Petroleum 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 Strat Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strat Petroleum has no effect on the direction of Aquagold International i.e., Aquagold International and Strat Petroleum go up and down completely randomly.

Pair Corralation between Aquagold International and Strat Petroleum

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Strat Petroleum. But the pink sheet apears to be less risky and, when comparing its historical volatility, Aquagold International is 10.71 times less risky than Strat Petroleum. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Strat Petroleum is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Strat Petroleum on October 5, 2024 and sell it today you would earn a total of  0.00  from holding Strat Petroleum or generate 9.223372036854776E16% return on investment over 90 days.

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

Aquagold International  vs.  Strat Petroleum

Aquagold International

Risk-Adjusted Performance

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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.

Strat Petroleum

Risk-Adjusted Performance

10 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Strat Petroleum are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Strat Petroleum disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aquagold International and Strat Petroleum

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

The idea behind Aquagold International and Strat Petroleum 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.