Correlation Between REGAL ASIAN and Errawarra Resources

Can any of the company-specific risk be diversified away by investing in both REGAL ASIAN and Errawarra 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 ASIAN and Errawarra Resources 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 Errawarra Resources, you can compare the effects of market volatilities on REGAL ASIAN and Errawarra 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 ASIAN with a short position of Errawarra Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of REGAL ASIAN and Errawarra Resources.

Diversification Opportunities for REGAL ASIAN and Errawarra Resources

0.15

Correlation Coefficient

REGAL ASIAN  Errawarra Resources

Average diversification

The 3 months correlation between REGAL and Errawarra is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding REGAL ASIAN INVESTMENTS and Errawarra Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Errawarra Resources 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 Errawarra Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Errawarra Resources has no effect on the direction of REGAL ASIAN i.e., REGAL ASIAN and Errawarra Resources go up and down completely randomly.

Pair Corralation between REGAL ASIAN and Errawarra Resources

Assuming the 90 days trading horizon REGAL ASIAN INVESTMENTS is expected to generate 0.19 times more return on investment than Errawarra Resources. However, REGAL ASIAN INVESTMENTS is 5.27 times less risky than Errawarra Resources. It trades about 0.05 of its potential returns per unit of risk. Errawarra Resources is currently generating about -0.02 per unit of risk. If you would invest  198.00  in REGAL ASIAN INVESTMENTS on September 12, 2024 and sell it today you would earn a total of  9.00  from holding REGAL ASIAN INVESTMENTS or generate 4.55% return on investment over 90 days.

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

REGAL ASIAN INVESTMENTS  vs.  Errawarra Resources

REGAL ASIAN INVESTMENTS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in REGAL ASIAN INVESTMENTS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, REGAL ASIAN is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Errawarra Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Errawarra Resources 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.

Pair Trading with REGAL ASIAN and Errawarra Resources

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

The idea behind REGAL ASIAN INVESTMENTS and Errawarra Resources 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.