Correlation Between Asia Vital and Alexander Marine

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

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

Diversification Opportunities for Asia Vital and Alexander Marine

-0.57

Correlation Coefficient

Asia Vital  Alexander Marine

Excellent diversification

The 3 months correlation between Asia and Alexander is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Asia Vital Components and Alexander Marine Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexander Marine and Asia Vital 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 Vital Components are associated (or correlated) with Alexander Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexander Marine has no effect on the direction of Asia Vital i.e., Asia Vital and Alexander Marine go up and down completely randomly.

Pair Corralation between Asia Vital and Alexander Marine

Assuming the 90 days trading horizon Asia Vital Components is expected to generate 1.48 times more return on investment than Alexander Marine. However, Asia Vital is 1.48 times more volatile than Alexander Marine Co. It trades about 0.11 of its potential returns per unit of risk. Alexander Marine Co is currently generating about -0.28 per unit of risk. If you would invest  53,700  in Asia Vital Components on September 18, 2024 and sell it today you would earn a total of  10,000  from holding Asia Vital Components or generate 18.62% return on investment over 90 days.

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

Asia Vital Components  vs.  Alexander Marine Co

Asia Vital Components

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Vital Components are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Asia Vital showed solid returns over the last few months and may actually be approaching a breakup point.

Alexander Marine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alexander Marine Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Asia Vital and Alexander Marine

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

The idea behind Asia Vital Components and Alexander Marine 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.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.