Correlation Between Asia Metal and Turvo International

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

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

Diversification Opportunities for Asia Metal and Turvo International

0.39

Correlation Coefficient

Asia Metal  Turvo International

Weak diversification

The 3 months correlation between Asia and Turvo is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Asia Metal Industries and Turvo International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turvo International and Asia Metal 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 Metal Industries are associated (or correlated) with Turvo International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turvo International has no effect on the direction of Asia Metal i.e., Asia Metal and Turvo International go up and down completely randomly.

Pair Corralation between Asia Metal and Turvo International

Assuming the 90 days trading horizon Asia Metal is expected to generate 19.9 times less return on investment than Turvo International. But when comparing it to its historical volatility, Asia Metal Industries is 1.4 times less risky than Turvo International. It trades about 0.02 of its potential returns per unit of risk. Turvo International Co is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  17,150  in Turvo International Co on September 27, 2024 and sell it today you would earn a total of  8,850  from holding Turvo International Co or generate 51.6% return on investment over 90 days.

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

Asia Metal Industries  vs.  Turvo International Co

Asia Metal Industries

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Metal Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Turvo International

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Turvo International Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Turvo International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asia Metal and Turvo International

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

The idea behind Asia Metal Industries and Turvo International 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.