Correlation Between Regal Funds and Light Wonder

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

Diversification Opportunities for Regal Funds and Light Wonder

-0.6

Correlation Coefficient

Regal Funds  Light Wonder

Excellent diversification

The 3 months correlation between Regal and Light is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Regal Funds Management and Light Wonder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Light Wonder 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 Light Wonder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Light Wonder has no effect on the direction of Regal Funds i.e., Regal Funds and Light Wonder go up and down completely randomly.

Pair Corralation between Regal Funds and Light Wonder

Assuming the 90 days trading horizon Regal Funds Management is expected to under-perform the Light Wonder. In addition to that, Regal Funds is 1.73 times more volatile than Light Wonder. It trades about -0.12 of its total potential returns per unit of risk. Light Wonder is currently generating about 0.06 per unit of volatility. If you would invest  13,901  in Light Wonder on December 28, 2024 and sell it today you would earn a total of  1,230  from holding Light Wonder or generate 8.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Regal Funds Management  vs.  Light Wonder

Regal Funds Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days Regal Funds Management 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 essential indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Light Wonder

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Light Wonder are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Light Wonder may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Regal Funds and Light Wonder

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

The idea behind Regal Funds Management and Light Wonder 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.