Correlation Between REGAL ASIAN and Australian Potash

Can any of the company-specific risk be diversified away by investing in both REGAL ASIAN and Australian Potash 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 ASIAN and Australian Potash into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between REGAL ASIAN INVESTMENTS and Australian Potash, you can compare the effects of market volatilities on REGAL ASIAN and Australian Potash 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 ASIAN with a short position of Australian Potash. Check out your portfolio center. Please also check ongoing floating volatility patterns of REGAL ASIAN and Australian Potash.

Diversification Opportunities for REGAL ASIAN and Australian Potash

0.27

Correlation Coefficient

REGAL ASIAN  Australian Potash

Modest diversification

The 3 months correlation between REGAL and Australian is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding REGAL ASIAN INVESTMENTS and Australian Potash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Potash and REGAL ASIAN 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 ASIAN INVESTMENTS are associated (or correlated) with Australian Potash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Potash has no effect on the direction of REGAL ASIAN i.e., REGAL ASIAN and Australian Potash go up and down completely randomly.

Pair Corralation between REGAL ASIAN and Australian Potash

Assuming the 90 days trading horizon REGAL ASIAN INVESTMENTS is expected to generate 0.11 times more return on investment than Australian Potash. However, REGAL ASIAN INVESTMENTS is 9.46 times less risky than Australian Potash. It trades about 0.07 of its potential returns per unit of risk. Australian Potash is currently generating about 0.0 per unit of risk. If you would invest  194.00  in REGAL ASIAN INVESTMENTS on September 17, 2024 and sell it today you would earn a total of  13.00  from holding REGAL ASIAN INVESTMENTS or generate 6.7% return on investment over 90 days.

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

REGAL ASIAN INVESTMENTS  vs.  Australian Potash

REGAL ASIAN INVESTMENTS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in REGAL ASIAN INVESTMENTS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, REGAL ASIAN may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Australian Potash

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Australian Potash has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Australian Potash 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 ASIAN and Australian Potash

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

The idea behind REGAL ASIAN INVESTMENTS and Australian Potash 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.