Correlation Between REGAL ASIAN and Iluka Resources

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

Diversification Opportunities for REGAL ASIAN and Iluka Resources

-0.49

Correlation Coefficient

REGAL ASIAN  Iluka Resources

Very good diversification

The 3 months correlation between REGAL and Iluka is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding REGAL ASIAN INVESTMENTS and Iluka Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iluka 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 Iluka Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iluka Resources has no effect on the direction of REGAL ASIAN i.e., REGAL ASIAN and Iluka Resources go up and down completely randomly.

Pair Corralation between REGAL ASIAN and Iluka Resources

Assuming the 90 days trading horizon REGAL ASIAN INVESTMENTS is expected to generate 0.58 times more return on investment than Iluka Resources. However, REGAL ASIAN INVESTMENTS is 1.72 times less risky than Iluka Resources. It trades about 0.1 of its potential returns per unit of risk. Iluka Resources is currently generating about -0.16 per unit of risk. If you would invest  203.00  in REGAL ASIAN INVESTMENTS on November 29, 2024 and sell it today you would earn a total of  17.00  from holding REGAL ASIAN INVESTMENTS or generate 8.37% return on investment over 90 days.

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

REGAL ASIAN INVESTMENTS  vs.  Iluka Resources

REGAL ASIAN INVESTMENTS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in REGAL ASIAN INVESTMENTS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, REGAL ASIAN may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Iluka Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iluka Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with REGAL ASIAN and Iluka Resources

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

The idea behind REGAL ASIAN INVESTMENTS and Iluka 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.