Correlation Between Aquagold International and Brooge Energy

Can any of the company-specific risk be diversified away by investing in both Aquagold International and Brooge Energy 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 Aquagold International and Brooge Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aquagold International and Brooge Energy Limited, you can compare the effects of market volatilities on Aquagold International and Brooge Energy 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 Aquagold International with a short position of Brooge Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and Brooge Energy.

Diversification Opportunities for Aquagold International and Brooge Energy

0.27

Correlation Coefficient

Aquagold International  Brooge Energy

Modest diversification

The 3 months correlation between Aquagold and Brooge is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Brooge Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brooge Energy Limited and Aquagold International 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 Aquagold International are associated (or correlated) with Brooge Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brooge Energy Limited has no effect on the direction of Aquagold International i.e., Aquagold International and Brooge Energy go up and down completely randomly.

Pair Corralation between Aquagold International and Brooge Energy

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Brooge Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Aquagold International is 3.29 times less risky than Brooge Energy. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Brooge Energy Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.36  in Brooge Energy Limited on September 30, 2024 and sell it today you would lose (0.29) from holding Brooge Energy Limited or give up 80.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	59.38%
Values	Daily Returns

Aquagold International  vs.  Brooge Energy Limited

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Brooge Energy Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brooge Energy Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Brooge Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aquagold International and Brooge Energy

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

The idea behind Aquagold International and Brooge Energy Limited 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.