Correlation Between REGAL ASIAN and Regal Investment

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

Diversification Opportunities for REGAL ASIAN and Regal Investment

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between REGAL and Regal is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding REGAL ASIAN INVESTMENTS and Regal Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regal Investment 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 Regal Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regal Investment has no effect on the direction of REGAL ASIAN i.e., REGAL ASIAN and Regal Investment go up and down completely randomly.

Pair Corralation between REGAL ASIAN and Regal Investment

Assuming the 90 days trading horizon REGAL ASIAN INVESTMENTS is expected to under-perform the Regal Investment. In addition to that, REGAL ASIAN is 1.32 times more volatile than Regal Investment. It trades about -0.06 of its total potential returns per unit of risk. Regal Investment is currently generating about 0.0 per unit of volatility. If you would invest  338.00  in Regal Investment on October 1, 2024 and sell it today you would lose (2.00) from holding Regal Investment or give up 0.59% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

REGAL ASIAN INVESTMENTS  vs.  Regal Investment

 Performance 
       Timeline  
REGAL ASIAN INVESTMENTS 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 current stock price uproar, may contribute to short-horizon losses for the private investors.

REGAL ASIAN and Regal Investment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with REGAL ASIAN and Regal Investment

The main advantage of trading using opposite REGAL ASIAN and Regal Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REGAL ASIAN position performs unexpectedly, Regal Investment 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 Regal Investment will offset losses from the drop in Regal Investment's long position.
The idea behind REGAL ASIAN INVESTMENTS and Regal Investment 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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