Correlation Between Aquarius Engines and Carmit

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

Diversification Opportunities for Aquarius Engines and Carmit

-0.51

Correlation Coefficient

Aquarius Engines  Carmit

Excellent diversification

The 3 months correlation between Aquarius and Carmit is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Aquarius Engines AM and Carmit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carmit 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 Carmit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carmit has no effect on the direction of Aquarius Engines i.e., Aquarius Engines and Carmit go up and down completely randomly.

Pair Corralation between Aquarius Engines and Carmit

Assuming the 90 days trading horizon Aquarius Engines AM is expected to generate 1.45 times more return on investment than Carmit. However, Aquarius Engines is 1.45 times more volatile than Carmit. It trades about 0.27 of its potential returns per unit of risk. Carmit is currently generating about 0.0 per unit of risk. If you would invest  10,320  in Aquarius Engines AM on September 28, 2024 and sell it today you would earn a total of  3,120  from holding Aquarius Engines AM or generate 30.23% return on investment over 90 days.

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

Aquarius Engines AM  vs.  Carmit

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.

Carmit

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Carmit are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Carmit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aquarius Engines and Carmit

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

The idea behind Aquarius Engines AM and Carmit 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.