Correlation Between Regal Investment and Carawine Resources

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

By analyzing existing cross correlation between Regal Investment and Carawine Resources Limited, you can compare the effects of market volatilities on Regal Investment and Carawine Resources 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 Carawine Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regal Investment and Carawine Resources.

Diversification Opportunities for Regal Investment and Carawine Resources

0.01

Correlation Coefficient

Regal Investment  Carawine Resources

Significant diversification

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

Pair Corralation between Regal Investment and Carawine Resources

Assuming the 90 days trading horizon Regal Investment is expected to under-perform the Carawine Resources. But the stock apears to be less risky and, when comparing its historical volatility, Regal Investment is 3.02 times less risky than Carawine Resources. The stock trades about -0.12 of its potential returns per unit of risk. The Carawine Resources Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Carawine Resources Limited on December 30, 2024 and sell it today you would lose (0.10) from holding Carawine Resources Limited or give up 1.0% of portfolio value over 90 days.

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

Regal Investment  vs.  Carawine Resources Limited

Regal Investment

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Carawine Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Carawine Resources Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Carawine Resources is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Regal Investment and Carawine Resources

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

The idea behind Regal Investment and Carawine Resources Limited 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.