Correlation Between Finetechnix CoLtd and Asia Pacific

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

By analyzing existing cross correlation between Finetechnix CoLtd and Asia Pacific Satellite, you can compare the effects of market volatilities on Finetechnix CoLtd and Asia Pacific 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 Finetechnix CoLtd with a short position of Asia Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finetechnix CoLtd and Asia Pacific.

Diversification Opportunities for Finetechnix CoLtd and Asia Pacific

0.12

Correlation Coefficient

Finetechnix CoLtd  Asia Pacific

Average diversification

The 3 months correlation between Finetechnix and Asia is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Finetechnix CoLtd and Asia Pacific Satellite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Pacific Satellite and Finetechnix CoLtd 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 Finetechnix CoLtd are associated (or correlated) with Asia Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Pacific Satellite has no effect on the direction of Finetechnix CoLtd i.e., Finetechnix CoLtd and Asia Pacific go up and down completely randomly.

Pair Corralation between Finetechnix CoLtd and Asia Pacific

Assuming the 90 days trading horizon Finetechnix CoLtd is expected to generate 1.53 times more return on investment than Asia Pacific. However, Finetechnix CoLtd is 1.53 times more volatile than Asia Pacific Satellite. It trades about 0.11 of its potential returns per unit of risk. Asia Pacific Satellite is currently generating about 0.11 per unit of risk. If you would invest  102,500  in Finetechnix CoLtd on October 26, 2024 and sell it today you would earn a total of  45,100  from holding Finetechnix CoLtd or generate 44.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Finetechnix CoLtd  vs.  Asia Pacific Satellite

Finetechnix CoLtd

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Finetechnix CoLtd are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Finetechnix CoLtd sustained solid returns over the last few months and may actually be approaching a breakup point.

Asia Pacific Satellite

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Pacific Satellite are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Asia Pacific sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Finetechnix CoLtd and Asia Pacific

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

The idea behind Finetechnix CoLtd and Asia Pacific Satellite 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.