Correlation Between Regal Funds and Australian Unity

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

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

Diversification Opportunities for Regal Funds and Australian Unity

-0.66

Correlation Coefficient

Regal Funds  Australian Unity

Excellent diversification

The 3 months correlation between Regal and Australian is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Regal Funds Management and Australian Unity Office in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Unity Office and Regal Funds 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 Funds Management are associated (or correlated) with Australian Unity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Unity Office has no effect on the direction of Regal Funds i.e., Regal Funds and Australian Unity go up and down completely randomly.

Pair Corralation between Regal Funds and Australian Unity

Assuming the 90 days trading horizon Regal Funds Management is expected to generate 2.26 times more return on investment than Australian Unity. However, Regal Funds is 2.26 times more volatile than Australian Unity Office. It trades about 0.11 of its potential returns per unit of risk. Australian Unity Office is currently generating about -0.11 per unit of risk. If you would invest  330.00  in Regal Funds Management on September 16, 2024 and sell it today you would earn a total of  51.00  from holding Regal Funds Management or generate 15.45% return on investment over 90 days.

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

Regal Funds Management  vs.  Australian Unity Office

Regal Funds Management

Risk-Adjusted Performance

8 of 100

OK

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

Australian Unity Office

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Australian Unity Office has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Regal Funds and Australian Unity

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

The idea behind Regal Funds Management and Australian Unity Office 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.