Correlation Between Acelon Chemicals and Pan Asia

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

Diversification Opportunities for Acelon Chemicals and Pan Asia

0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between Acelon and Pan is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Acelon Chemicals Fiber and Pan Asia Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan Asia Chemical and Acelon Chemicals 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 Acelon Chemicals Fiber are associated (or correlated) with Pan Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan Asia Chemical has no effect on the direction of Acelon Chemicals i.e., Acelon Chemicals and Pan Asia go up and down completely randomly.

Pair Corralation between Acelon Chemicals and Pan Asia

Assuming the 90 days trading horizon Acelon Chemicals Fiber is expected to under-perform the Pan Asia. In addition to that, Acelon Chemicals is 5.08 times more volatile than Pan Asia Chemical. It trades about -0.43 of its total potential returns per unit of risk. Pan Asia Chemical is currently generating about -0.37 per unit of volatility. If you would invest  1,425  in Pan Asia Chemical on October 7, 2024 and sell it today you would lose (40.00) from holding Pan Asia Chemical or give up 2.81% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Acelon Chemicals Fiber  vs.  Pan Asia Chemical

 Performance 
       Timeline  
Acelon Chemicals Fiber 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Acelon Chemicals Fiber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.
Pan Asia Chemical 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pan Asia Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Acelon Chemicals and Pan Asia Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Acelon Chemicals and Pan Asia

The main advantage of trading using opposite Acelon Chemicals and Pan Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acelon Chemicals position performs unexpectedly, Pan Asia 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 Pan Asia will offset losses from the drop in Pan Asia's long position.
The idea behind Acelon Chemicals Fiber and Pan Asia Chemical 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.
Check out your portfolio center.
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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