Correlation Between Regal Investment and Austco Healthcare

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

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

Diversification Opportunities for Regal Investment and Austco Healthcare

-0.42

Correlation Coefficient

Regal Investment  Austco Healthcare

Very good diversification

The 3 months correlation between Regal and Austco is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Regal Investment and Austco Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austco Healthcare and Regal Investment 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 Regal Investment are associated (or correlated) with Austco Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austco Healthcare has no effect on the direction of Regal Investment i.e., Regal Investment and Austco Healthcare go up and down completely randomly.

Pair Corralation between Regal Investment and Austco Healthcare

Assuming the 90 days trading horizon Regal Investment is expected to under-perform the Austco Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Regal Investment is 2.3 times less risky than Austco Healthcare. The stock trades about -0.06 of its potential returns per unit of risk. The Austco Healthcare is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Austco Healthcare on October 24, 2024 and sell it today you would earn a total of  8.00  from holding Austco Healthcare or generate 33.33% return on investment over 90 days.

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

Regal Investment  vs.  Austco Healthcare

Regal Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regal Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Regal Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Austco Healthcare

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Austco Healthcare are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Austco Healthcare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Regal Investment and Austco Healthcare

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

The idea behind Regal Investment and Austco Healthcare 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.