Correlation Between Min Aik and Associated Industries

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

By analyzing existing cross correlation between Min Aik Technology and Associated Industries China, you can compare the effects of market volatilities on Min Aik and Associated Industries 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 Min Aik with a short position of Associated Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Min Aik and Associated Industries.

Diversification Opportunities for Min Aik and Associated Industries

-0.1

Correlation Coefficient

Min Aik  Associated Industries

Good diversification

The 3 months correlation between Min and Associated is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Min Aik Technology and Associated Industries China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated Industries and Min Aik 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 Min Aik Technology are associated (or correlated) with Associated Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated Industries has no effect on the direction of Min Aik i.e., Min Aik and Associated Industries go up and down completely randomly.

Pair Corralation between Min Aik and Associated Industries

Assuming the 90 days trading horizon Min Aik Technology is expected to generate 1.32 times more return on investment than Associated Industries. However, Min Aik is 1.32 times more volatile than Associated Industries China. It trades about 0.16 of its potential returns per unit of risk. Associated Industries China is currently generating about -0.03 per unit of risk. If you would invest  2,420  in Min Aik Technology on December 30, 2024 and sell it today you would earn a total of  450.00  from holding Min Aik Technology or generate 18.6% return on investment over 90 days.

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

Min Aik Technology  vs.  Associated Industries China

Min Aik Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Min Aik Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Min Aik showed solid returns over the last few months and may actually be approaching a breakup point.

Associated Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Associated Industries China has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Associated Industries is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Min Aik and Associated Industries

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

The idea behind Min Aik Technology and Associated Industries China 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.