Correlation Between Aquagold International and Barloworld

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Can any of the company-specific risk be diversified away by investing in both Aquagold International and Barloworld 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 Aquagold International and Barloworld into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aquagold International and Barloworld Ltd ADR, you can compare the effects of market volatilities on Aquagold International and Barloworld 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 Aquagold International with a short position of Barloworld. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and Barloworld.

Diversification Opportunities for Aquagold International and Barloworld

  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Aquagold and Barloworld is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Barloworld Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barloworld ADR and Aquagold International 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 Aquagold International are associated (or correlated) with Barloworld. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barloworld ADR has no effect on the direction of Aquagold International i.e., Aquagold International and Barloworld go up and down completely randomly.

Pair Corralation between Aquagold International and Barloworld

Given the investment horizon of 90 days Aquagold International is expected to generate 4.17 times more return on investment than Barloworld. However, Aquagold International is 4.17 times more volatile than Barloworld Ltd ADR. It trades about 0.06 of its potential returns per unit of risk. Barloworld Ltd ADR is currently generating about 0.06 per unit of risk. If you would invest  17.00  in Aquagold International on March 27, 2024 and sell it today you would lose (16.40) from holding Aquagold International or give up 96.47% of portfolio value over 90 days.
Time Period3 Months [change]
ValuesDaily Returns

Aquagold International  vs.  Barloworld Ltd ADR

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 fairly strong basic indicators, Aquagold International is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.
Barloworld ADR 

Risk-Adjusted Performance

16 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Barloworld Ltd ADR are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Barloworld showed solid returns over the last few months and may actually be approaching a breakup point.

Aquagold International and Barloworld Volatility Contrast

   Predicted Return Density   

Pair Trading with Aquagold International and Barloworld

The main advantage of trading using opposite Aquagold International and Barloworld positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International position performs unexpectedly, Barloworld 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 Barloworld will offset losses from the drop in Barloworld's long position.
The idea behind Aquagold International and Barloworld Ltd ADR 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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