Correlation Between Black Cat and Regal Investment

Can any of the company-specific risk be diversified away by investing in both Black Cat and Regal Investment 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 Black Cat and Regal Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Black Cat Syndicate and Regal Investment, you can compare the effects of market volatilities on Black Cat and Regal Investment 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 Black Cat with a short position of Regal Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Cat and Regal Investment.

Diversification Opportunities for Black Cat and Regal Investment

0.05

Correlation Coefficient

Black Cat  Regal Investment

Significant diversification

The 3 months correlation between Black and Regal is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Black Cat Syndicate and Regal Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regal Investment and Black Cat 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 Black Cat Syndicate are associated (or correlated) with Regal Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regal Investment has no effect on the direction of Black Cat i.e., Black Cat and Regal Investment go up and down completely randomly.

Pair Corralation between Black Cat and Regal Investment

Assuming the 90 days trading horizon Black Cat Syndicate is expected to generate 3.4 times more return on investment than Regal Investment. However, Black Cat is 3.4 times more volatile than Regal Investment. It trades about 0.11 of its potential returns per unit of risk. Regal Investment is currently generating about -0.03 per unit of risk. If you would invest  46.00  in Black Cat Syndicate on September 28, 2024 and sell it today you would earn a total of  12.00  from holding Black Cat Syndicate or generate 26.09% return on investment over 90 days.

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

Black Cat Syndicate  vs.  Regal Investment

Black Cat Syndicate

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Black Cat Syndicate are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Black Cat unveiled solid returns over the last few months and may actually be approaching a breakup point.

Regal Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regal Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Regal Investment is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Black Cat and Regal Investment

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

The idea behind Black Cat Syndicate and Regal Investment 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 Transaction History module to view history of all your transactions and understand their impact on performance.