Correlation Between REGAL ASIAN and Coles

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

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

Diversification Opportunities for REGAL ASIAN and Coles

-0.87

Correlation Coefficient

REGAL ASIAN  Coles

Pay attention - limited upside

The 3 months correlation between REGAL and Coles is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding REGAL ASIAN INVESTMENTS and Coles Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coles Group and REGAL ASIAN 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 ASIAN INVESTMENTS are associated (or correlated) with Coles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coles Group has no effect on the direction of REGAL ASIAN i.e., REGAL ASIAN and Coles go up and down completely randomly.

Pair Corralation between REGAL ASIAN and Coles

Assuming the 90 days trading horizon REGAL ASIAN is expected to generate 1.52 times less return on investment than Coles. In addition to that, REGAL ASIAN is 1.43 times more volatile than Coles Group. It trades about 0.02 of its total potential returns per unit of risk. Coles Group is currently generating about 0.05 per unit of volatility. If you would invest  1,551  in Coles Group on September 4, 2024 and sell it today you would earn a total of  321.00  from holding Coles Group or generate 20.7% return on investment over 90 days.

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

REGAL ASIAN INVESTMENTS  vs.  Coles Group

REGAL ASIAN INVESTMENTS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in REGAL ASIAN INVESTMENTS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, REGAL ASIAN is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Coles Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coles Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Coles 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 ASIAN and Coles

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

The idea behind REGAL ASIAN INVESTMENTS and Coles Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.