Correlation Between I-Components and ASTORY CoLtd

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

By analyzing existing cross correlation between i Components Co and ASTORY CoLtd, you can compare the effects of market volatilities on I-Components and ASTORY CoLtd 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 I-Components with a short position of ASTORY CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of I-Components and ASTORY CoLtd.

Diversification Opportunities for I-Components and ASTORY CoLtd

0.61

Correlation Coefficient

I-Components  ASTORY CoLtd

Poor diversification

The 3 months correlation between I-Components and ASTORY is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding i Components Co and ASTORY CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASTORY CoLtd and I-Components 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 i Components Co are associated (or correlated) with ASTORY CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASTORY CoLtd has no effect on the direction of I-Components i.e., I-Components and ASTORY CoLtd go up and down completely randomly.

Pair Corralation between I-Components and ASTORY CoLtd

Assuming the 90 days trading horizon i Components Co is expected to generate 1.1 times more return on investment than ASTORY CoLtd. However, I-Components is 1.1 times more volatile than ASTORY CoLtd. It trades about -0.02 of its potential returns per unit of risk. ASTORY CoLtd is currently generating about -0.08 per unit of risk. If you would invest  720,000  in i Components Co on September 26, 2024 and sell it today you would lose (249,500) from holding i Components Co or give up 34.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

i Components Co  vs.  ASTORY CoLtd

i Components

Risk-Adjusted Performance

0 of 100

Very Weak

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

ASTORY CoLtd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ASTORY CoLtd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ASTORY CoLtd may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with I-Components and ASTORY CoLtd

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

The idea behind i Components Co and ASTORY CoLtd 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.