Correlation Between Aquagold International and ESAB Corp

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

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

Diversification Opportunities for Aquagold International and ESAB Corp

0.0

Correlation Coefficient

Aquagold International  ESAB Corp

Pay attention - limited upside

The 3 months correlation between Aquagold and ESAB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and ESAB Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESAB Corp 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 ESAB Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESAB Corp has no effect on the direction of Aquagold International i.e., Aquagold International and ESAB Corp go up and down completely randomly.

Pair Corralation between Aquagold International and ESAB Corp

Given the investment horizon of 90 days Aquagold International is expected to generate 27.04 times more return on investment than ESAB Corp. However, Aquagold International is 27.04 times more volatile than ESAB Corp. It trades about 0.06 of its potential returns per unit of risk. ESAB Corp is currently generating about 0.11 per unit of risk. If you would invest  17.00  in Aquagold International on September 20, 2024 and sell it today you would lose (16.40) from holding Aquagold International or give up 96.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Aquagold International  vs.  ESAB Corp

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 fairly strong basic indicators, Aquagold International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

ESAB Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ESAB Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, ESAB Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aquagold International and ESAB Corp

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

The idea behind Aquagold International and ESAB Corp 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..