Correlation Between Aquagold International and Fidelity China

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

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

Diversification Opportunities for Aquagold International and Fidelity China

0.12

Correlation Coefficient

Aquagold International  Fidelity China

Average diversification

The 3 months correlation between Aquagold and Fidelity is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Fidelity China Region in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity China Region 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 Fidelity China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity China Region has no effect on the direction of Aquagold International i.e., Aquagold International and Fidelity China go up and down completely randomly.

Pair Corralation between Aquagold International and Fidelity China

Given the investment horizon of 90 days Aquagold International is expected to generate 39.8 times more return on investment than Fidelity China. However, Aquagold International is 39.8 times more volatile than Fidelity China Region. It trades about 0.05 of its potential returns per unit of risk. Fidelity China Region is currently generating about 0.03 per unit of risk. If you would invest  17.00  in Aquagold International on September 28, 2024 and sell it today you would lose (16.96) from holding Aquagold International or give up 99.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aquagold International  vs.  Fidelity China Region

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.

Fidelity China Region

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity China Region has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Fidelity China is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aquagold International and Fidelity China

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

The idea behind Aquagold International and Fidelity China Region 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.