Correlation Between Asia Cement and Sampo Corp

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

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

Diversification Opportunities for Asia Cement and Sampo Corp

0.68

Correlation Coefficient

Asia Cement  Sampo Corp

Poor diversification

The 3 months correlation between Asia and Sampo is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Asia Cement Corp and Sampo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sampo Corp and Asia Cement 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 Asia Cement Corp are associated (or correlated) with Sampo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sampo Corp has no effect on the direction of Asia Cement i.e., Asia Cement and Sampo Corp go up and down completely randomly.

Pair Corralation between Asia Cement and Sampo Corp

Assuming the 90 days trading horizon Asia Cement Corp is expected to generate 4.49 times more return on investment than Sampo Corp. However, Asia Cement is 4.49 times more volatile than Sampo Corp. It trades about 0.05 of its potential returns per unit of risk. Sampo Corp is currently generating about 0.05 per unit of risk. If you would invest  4,245  in Asia Cement Corp on December 5, 2024 and sell it today you would earn a total of  125.00  from holding Asia Cement Corp or generate 2.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Asia Cement Corp  vs.  Sampo Corp

Asia Cement Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Cement Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Asia Cement is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Sampo Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sampo Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Sampo Corp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Asia Cement and Sampo Corp

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

The idea behind Asia Cement Corp and Sampo Corp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.