Correlation Between Tigi and Aquarius Engines

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

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

Diversification Opportunities for Tigi and Aquarius Engines

0.18

Correlation Coefficient

Tigi  Aquarius Engines

Average diversification

The 3 months correlation between Tigi and Aquarius is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Tigi and Aquarius Engines AM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquarius Engines and Tigi 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 Tigi are associated (or correlated) with Aquarius Engines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquarius Engines has no effect on the direction of Tigi i.e., Tigi and Aquarius Engines go up and down completely randomly.

Pair Corralation between Tigi and Aquarius Engines

Assuming the 90 days trading horizon Tigi is expected to generate 0.96 times more return on investment than Aquarius Engines. However, Tigi is 1.04 times less risky than Aquarius Engines. It trades about 0.05 of its potential returns per unit of risk. Aquarius Engines AM is currently generating about -0.01 per unit of risk. If you would invest  77,850  in Tigi on September 28, 2024 and sell it today you would earn a total of  4,800  from holding Tigi or generate 6.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.87%
Values	Daily Returns

Tigi  vs.  Aquarius Engines AM

Tigi

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tigi are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tigi sustained solid returns over the last few months and may actually be approaching a breakup point.

Aquarius Engines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquarius Engines AM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Aquarius Engines is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tigi and Aquarius Engines

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

The idea behind Tigi and Aquarius Engines AM 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.