Correlation Between Datavan International and Asia Metal

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

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

Diversification Opportunities for Datavan International and Asia Metal

0.41

Correlation Coefficient

Datavan International  Asia Metal

Very weak diversification

The 3 months correlation between Datavan and Asia is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Datavan International and Asia Metal Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Metal Industries and Datavan International 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 Datavan International are associated (or correlated) with Asia Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Metal Industries has no effect on the direction of Datavan International i.e., Datavan International and Asia Metal go up and down completely randomly.

Pair Corralation between Datavan International and Asia Metal

Assuming the 90 days trading horizon Datavan International is expected to under-perform the Asia Metal. In addition to that, Datavan International is 1.13 times more volatile than Asia Metal Industries. It trades about -0.03 of its total potential returns per unit of risk. Asia Metal Industries is currently generating about -0.02 per unit of volatility. If you would invest  8,350  in Asia Metal Industries on October 25, 2024 and sell it today you would lose (450.00) from holding Asia Metal Industries or give up 5.39% of portfolio value over 90 days.

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

Datavan International  vs.  Asia Metal Industries

Datavan International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Asia Metal Industries

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Datavan International and Asia Metal

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

The idea behind Datavan International and Asia Metal Industries 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.