Correlation Between Asia Metal and Scan D

Can any of the company-specific risk be diversified away by investing in both Asia Metal and Scan D 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 Scan D 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 Scan D, you can compare the effects of market volatilities on Asia Metal and Scan D 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 Scan D. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Metal and Scan D.

Diversification Opportunities for Asia Metal and Scan D

-0.1

Correlation Coefficient

Asia Metal  Scan D

Good diversification

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

Pair Corralation between Asia Metal and Scan D

Assuming the 90 days trading horizon Asia Metal Industries is expected to under-perform the Scan D. In addition to that, Asia Metal is 1.46 times more volatile than Scan D. It trades about -0.2 of its total potential returns per unit of risk. Scan D is currently generating about -0.04 per unit of volatility. If you would invest  3,490  in Scan D on December 22, 2024 and sell it today you would lose (115.00) from holding Scan D or give up 3.3% of portfolio value over 90 days.

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

Asia Metal Industries  vs.  Scan D

Asia Metal Industries

Risk-Adjusted Performance

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Scan D

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Asia Metal Industries and Scan D 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.