Correlation Between Aqua Power and Borealis Exploration

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

By analyzing existing cross correlation between Aqua Power Systems and Borealis Exploration, you can compare the effects of market volatilities on Aqua Power and Borealis Exploration 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 Aqua Power with a short position of Borealis Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqua Power and Borealis Exploration.

Diversification Opportunities for Aqua Power and Borealis Exploration

0.03

Correlation Coefficient

Aqua Power  Borealis Exploration

Significant diversification

The 3 months correlation between Aqua and Borealis is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Aqua Power Systems and Borealis Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borealis Exploration and Aqua Power 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 Aqua Power Systems are associated (or correlated) with Borealis Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borealis Exploration has no effect on the direction of Aqua Power i.e., Aqua Power and Borealis Exploration go up and down completely randomly.

Pair Corralation between Aqua Power and Borealis Exploration

Given the investment horizon of 90 days Aqua Power is expected to generate 4.01 times less return on investment than Borealis Exploration. But when comparing it to its historical volatility, Aqua Power Systems is 1.52 times less risky than Borealis Exploration. It trades about 0.04 of its potential returns per unit of risk. Borealis Exploration is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  200.00  in Borealis Exploration on May 6, 2025 and sell it today you would earn a total of  0.00  from holding Borealis Exploration or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Aqua Power Systems  vs.  Borealis Exploration

Aqua Power Systems

Risk-Adjusted Performance

Insignificant

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

Borealis Exploration

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Borealis Exploration are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Borealis Exploration reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aqua Power and Borealis Exploration

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

The idea behind Aqua Power Systems and Borealis Exploration 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.