Correlation Between Aquagold International and ALPS Equal

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

By analyzing existing cross correlation between Aquagold International and ALPS Equal Sector, you can compare the effects of market volatilities on Aquagold International and ALPS Equal 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 ALPS Equal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and ALPS Equal.

Diversification Opportunities for Aquagold International and ALPS Equal

0.14

Correlation Coefficient

Aquagold International  ALPS Equal

Average diversification

The 3 months correlation between Aquagold and ALPS is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and ALPS Equal Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALPS Equal Sector 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 ALPS Equal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALPS Equal Sector has no effect on the direction of Aquagold International i.e., Aquagold International and ALPS Equal go up and down completely randomly.

Pair Corralation between Aquagold International and ALPS Equal

Given the investment horizon of 90 days Aquagold International is expected to under-perform the ALPS Equal. In addition to that, Aquagold International is 19.25 times more volatile than ALPS Equal Sector. It trades about -0.13 of its total potential returns per unit of risk. ALPS Equal Sector is currently generating about 0.0 per unit of volatility. If you would invest  12,758  in ALPS Equal Sector on September 28, 2024 and sell it today you would lose (33.00) from holding ALPS Equal Sector or give up 0.26% of portfolio value over 90 days.

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

Aquagold International  vs.  ALPS Equal Sector

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.

ALPS Equal Sector

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALPS Equal Sector has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, ALPS Equal is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Aquagold International and ALPS Equal

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

The idea behind Aquagold International and ALPS Equal Sector 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.