Correlation Between Flagship Investments and Regal Investment

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

By analyzing existing cross correlation between Flagship Investments and Regal Investment, you can compare the effects of market volatilities on Flagship Investments and Regal Investment 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 Flagship Investments with a short position of Regal Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flagship Investments and Regal Investment.

Diversification Opportunities for Flagship Investments and Regal Investment

0.79

Correlation Coefficient

Flagship Investments  Regal Investment

Poor diversification

The 3 months correlation between Flagship and Regal is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Flagship Investments and Regal Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regal Investment and Flagship Investments 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 Flagship Investments are associated (or correlated) with Regal Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regal Investment has no effect on the direction of Flagship Investments i.e., Flagship Investments and Regal Investment go up and down completely randomly.

Pair Corralation between Flagship Investments and Regal Investment

Assuming the 90 days trading horizon Flagship Investments is expected to generate 0.98 times more return on investment than Regal Investment. However, Flagship Investments is 1.02 times less risky than Regal Investment. It trades about 0.11 of its potential returns per unit of risk. Regal Investment is currently generating about 0.07 per unit of risk. If you would invest  198.00  in Flagship Investments on August 31, 2024 and sell it today you would earn a total of  17.00  from holding Flagship Investments or generate 8.59% return on investment over 90 days.

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

Flagship Investments  vs.  Regal Investment

Flagship Investments

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flagship Investments are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Flagship Investments may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Regal Investment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Regal Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Regal Investment is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Flagship Investments and Regal Investment

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

The idea behind Flagship Investments and Regal Investment 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.