Correlation Between DeviceENGCOLtd and Asia Pacific

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

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

Diversification Opportunities for DeviceENGCOLtd and Asia Pacific

-0.2

Correlation Coefficient

DeviceENGCOLtd  Asia Pacific

Good diversification

The 3 months correlation between DeviceENGCOLtd and Asia is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding DeviceENGCOLtd 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 DeviceENGCOLtd 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 DeviceENGCOLtd 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 DeviceENGCOLtd i.e., DeviceENGCOLtd and Asia Pacific go up and down completely randomly.

Pair Corralation between DeviceENGCOLtd and Asia Pacific

Assuming the 90 days trading horizon DeviceENGCOLtd is expected to under-perform the Asia Pacific. But the stock apears to be less risky and, when comparing its historical volatility, DeviceENGCOLtd is 1.95 times less risky than Asia Pacific. The stock trades about -0.01 of its potential returns per unit of risk. The Asia Pacific Satellite is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,535,009  in Asia Pacific Satellite on October 25, 2024 and sell it today you would lose (176,009) from holding Asia Pacific Satellite or give up 11.47% of portfolio value over 90 days.

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

DeviceENGCOLtd  vs.  Asia Pacific Satellite

DeviceENGCOLtd

Risk-Adjusted Performance

0 of 100

Very Weak

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

Asia Pacific Satellite

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Pacific Satellite are ranked lower than 9 (%) 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 DeviceENGCOLtd and Asia Pacific

The main advantage of trading using opposite DeviceENGCOLtd and Asia Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DeviceENGCOLtd 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 DeviceENGCOLtd 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..