Correlation Between Aqua Power and Battery Future

Can any of the company-specific risk be diversified away by investing in both Aqua Power and Battery Future 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 Aqua Power and Battery Future into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aqua Power Systems and Battery Future Acquisition, you can compare the effects of market volatilities on Aqua Power and Battery Future 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 Aqua Power with a short position of Battery Future. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqua Power and Battery Future.

Diversification Opportunities for Aqua Power and Battery Future

0.75

Correlation Coefficient

Aqua Power  Battery Future

Poor diversification

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

Pair Corralation between Aqua Power and Battery Future

Given the investment horizon of 90 days Aqua Power Systems is expected to generate 40.7 times more return on investment than Battery Future. However, Aqua Power is 40.7 times more volatile than Battery Future Acquisition. It trades about 0.1 of its potential returns per unit of risk. Battery Future Acquisition is currently generating about 0.13 per unit of risk. If you would invest  1.66  in Aqua Power Systems on September 18, 2024 and sell it today you would earn a total of  0.74  from holding Aqua Power Systems or generate 44.58% return on investment over 90 days.

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

Aqua Power Systems  vs.  Battery Future Acquisition

Aqua Power Systems

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aqua Power Systems are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Aqua Power demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Battery Future Acqui

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Battery Future Acquisition are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Battery Future is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Aqua Power and Battery Future

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

The idea behind Aqua Power Systems and Battery Future Acquisition 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..