Correlation Between Regal Investment and Australian Strategic

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

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

Diversification Opportunities for Regal Investment and Australian Strategic

0.14

Correlation Coefficient

Regal Investment  Australian Strategic

Average diversification

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

Pair Corralation between Regal Investment and Australian Strategic

Assuming the 90 days trading horizon Regal Investment is expected to generate 0.28 times more return on investment than Australian Strategic. However, Regal Investment is 3.59 times less risky than Australian Strategic. It trades about 0.09 of its potential returns per unit of risk. Australian Strategic Materials is currently generating about 0.0 per unit of risk. If you would invest  321.00  in Regal Investment on September 20, 2024 and sell it today you would earn a total of  22.00  from holding Regal Investment or generate 6.85% return on investment over 90 days.

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

Regal Investment  vs.  Australian Strategic Materials

Regal Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Regal Investment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Regal Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Australian Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Regal Investment and Australian Strategic

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

The idea behind Regal Investment and Australian Strategic Materials 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.