Correlation Between ASTORY CoLtd and Cuckoo Homesys

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

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

Diversification Opportunities for ASTORY CoLtd and Cuckoo Homesys

0.02

Correlation Coefficient

ASTORY CoLtd  Cuckoo Homesys

Significant diversification

The 3 months correlation between ASTORY and Cuckoo is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding ASTORY CoLtd and Cuckoo Homesys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cuckoo Homesys and ASTORY 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 ASTORY CoLtd are associated (or correlated) with Cuckoo Homesys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cuckoo Homesys has no effect on the direction of ASTORY CoLtd i.e., ASTORY CoLtd and Cuckoo Homesys go up and down completely randomly.

Pair Corralation between ASTORY CoLtd and Cuckoo Homesys

Assuming the 90 days trading horizon ASTORY CoLtd is expected to generate 1.38 times more return on investment than Cuckoo Homesys. However, ASTORY CoLtd is 1.38 times more volatile than Cuckoo Homesys Co. It trades about 0.13 of its potential returns per unit of risk. Cuckoo Homesys Co is currently generating about -0.04 per unit of risk. If you would invest  675,000  in ASTORY CoLtd on September 5, 2024 and sell it today you would earn a total of  115,000  from holding ASTORY CoLtd or generate 17.04% return on investment over 90 days.

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

ASTORY CoLtd  vs.  Cuckoo Homesys Co

ASTORY CoLtd

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASTORY CoLtd are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ASTORY CoLtd sustained solid returns over the last few months and may actually be approaching a breakup point.

Cuckoo Homesys

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ASTORY CoLtd and Cuckoo Homesys

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

The idea behind ASTORY CoLtd and Cuckoo Homesys Co 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.