Correlation Between Asia Electronic and Xander International

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

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

Diversification Opportunities for Asia Electronic and Xander International

0.38

Correlation Coefficient

Asia Electronic  Xander International

Weak diversification

The 3 months correlation between Asia and Xander is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Asia Electronic Material and Xander International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xander International and Asia Electronic 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 Electronic Material are associated (or correlated) with Xander International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xander International has no effect on the direction of Asia Electronic i.e., Asia Electronic and Xander International go up and down completely randomly.

Pair Corralation between Asia Electronic and Xander International

Assuming the 90 days trading horizon Asia Electronic Material is expected to generate 0.89 times more return on investment than Xander International. However, Asia Electronic Material is 1.12 times less risky than Xander International. It trades about 0.0 of its potential returns per unit of risk. Xander International is currently generating about -0.01 per unit of risk. If you would invest  2,190  in Asia Electronic Material on October 9, 2024 and sell it today you would lose (150.00) from holding Asia Electronic Material or give up 6.85% of portfolio value over 90 days.

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

Asia Electronic Material  vs.  Xander International

Asia Electronic Material

Risk-Adjusted Performance

0 of 100

Very Weak

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

Xander International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xander International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Xander International 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 Asia Electronic and Xander International

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

The idea behind Asia Electronic Material and Xander International 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.