Correlation Between REGAL ASIAN and Technology One

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

Diversification Opportunities for REGAL ASIAN and Technology One

-0.8

Correlation Coefficient

REGAL ASIAN  Technology One

Pay attention - limited upside

The 3 months correlation between REGAL and Technology is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding REGAL ASIAN INVESTMENTS and Technology One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology One 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 Technology One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology One has no effect on the direction of REGAL ASIAN i.e., REGAL ASIAN and Technology One go up and down completely randomly.

Pair Corralation between REGAL ASIAN and Technology One

Assuming the 90 days trading horizon REGAL ASIAN is expected to generate 7.58 times less return on investment than Technology One. But when comparing it to its historical volatility, REGAL ASIAN INVESTMENTS is 1.08 times less risky than Technology One. It trades about 0.01 of its potential returns per unit of risk. Technology One is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,421  in Technology One on October 22, 2024 and sell it today you would earn a total of  1,448  from holding Technology One or generate 101.9% return on investment over 90 days.

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

REGAL ASIAN INVESTMENTS  vs.  Technology One

REGAL ASIAN INVESTMENTS

Risk-Adjusted Performance

0 of 100

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 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.

Technology One

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Technology One are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Technology One unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with REGAL ASIAN and Technology One

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

The idea behind REGAL ASIAN INVESTMENTS and Technology One 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.