Correlation Between Regal Funds and Australian Strategic

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

By analyzing existing cross correlation between Regal Funds Management and Australian Strategic Materials, you can compare the effects of market volatilities on Regal Funds and Australian Strategic 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 Funds with a short position of Australian Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regal Funds and Australian Strategic.

Diversification Opportunities for Regal Funds and Australian Strategic

-0.17

Correlation Coefficient

Regal Funds  Australian Strategic

Good diversification

The 3 months correlation between Regal and Australian is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Regal Funds Management and Australian Strategic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Strategic and Regal Funds 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 Funds Management are associated (or correlated) with Australian Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Strategic has no effect on the direction of Regal Funds i.e., Regal Funds and Australian Strategic go up and down completely randomly.

Pair Corralation between Regal Funds and Australian Strategic

Assuming the 90 days trading horizon Regal Funds Management is expected to under-perform the Australian Strategic. But the stock apears to be less risky and, when comparing its historical volatility, Regal Funds Management is 1.13 times less risky than Australian Strategic. The stock trades about -0.01 of its potential returns per unit of risk. The Australian Strategic Materials is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  49.00  in Australian Strategic Materials on October 8, 2024 and sell it today you would earn a total of  6.00  from holding Australian Strategic Materials or generate 12.24% return on investment over 90 days.

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

Regal Funds Management  vs.  Australian Strategic Materials

Regal Funds Management

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Regal Funds Management are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Regal Funds is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Australian Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Regal Funds Management and Australian Strategic Materials 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.