Correlation Between Aquarius Engines and BioLight Life

Can any of the company-specific risk be diversified away by investing in both Aquarius Engines and BioLight Life 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 Aquarius Engines and BioLight Life into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aquarius Engines AM and BioLight Life Sciences, you can compare the effects of market volatilities on Aquarius Engines and BioLight Life 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 Aquarius Engines with a short position of BioLight Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquarius Engines and BioLight Life.

Diversification Opportunities for Aquarius Engines and BioLight Life

-0.57

Correlation Coefficient

Aquarius Engines  BioLight Life

Excellent diversification

The 3 months correlation between Aquarius and BioLight is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Aquarius Engines AM and BioLight Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioLight Life Sciences and Aquarius Engines 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 Aquarius Engines AM are associated (or correlated) with BioLight Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioLight Life Sciences has no effect on the direction of Aquarius Engines i.e., Aquarius Engines and BioLight Life go up and down completely randomly.

Pair Corralation between Aquarius Engines and BioLight Life

Assuming the 90 days trading horizon Aquarius Engines AM is expected to under-perform the BioLight Life. In addition to that, Aquarius Engines is 1.63 times more volatile than BioLight Life Sciences. It trades about -0.02 of its total potential returns per unit of risk. BioLight Life Sciences is currently generating about -0.01 per unit of volatility. If you would invest  74,000  in BioLight Life Sciences on September 27, 2024 and sell it today you would lose (24,100) from holding BioLight Life Sciences or give up 32.57% of portfolio value over 90 days.

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

Aquarius Engines AM  vs.  BioLight Life Sciences

Aquarius Engines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquarius Engines AM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Aquarius Engines is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BioLight Life Sciences

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BioLight Life Sciences are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BioLight Life sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aquarius Engines and BioLight Life

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

The idea behind Aquarius Engines AM and BioLight Life Sciences 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..