Correlation Between Carlyle and Aquagold International

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

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

Diversification Opportunities for Carlyle and Aquagold International

-0.02

Correlation Coefficient

Carlyle  Aquagold International

Good diversification

The 3 months correlation between Carlyle and Aquagold is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and Aquagold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquagold International and Carlyle 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 Carlyle Group are associated (or correlated) with Aquagold International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquagold International has no effect on the direction of Carlyle i.e., Carlyle and Aquagold International go up and down completely randomly.

Pair Corralation between Carlyle and Aquagold International

Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 0.16 times more return on investment than Aquagold International. However, Carlyle Group is 6.22 times less risky than Aquagold International. It trades about 0.03 of its potential returns per unit of risk. Aquagold International is currently generating about -0.16 per unit of risk. If you would invest  4,987  in Carlyle Group on September 25, 2024 and sell it today you would earn a total of  117.50  from holding Carlyle Group or generate 2.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Carlyle Group  vs.  Aquagold International

Carlyle Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carlyle Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Carlyle reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Carlyle and Aquagold International

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

The idea behind Carlyle Group and Aquagold International 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.