Correlation Between Asia Broadband and Centor Energy

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

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

Diversification Opportunities for Asia Broadband and Centor Energy

0.19

Correlation Coefficient

Asia Broadband  Centor Energy

Average diversification

The 3 months correlation between Asia and Centor is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Asia Broadband and Centor Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centor Energy and Asia Broadband 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 Broadband are associated (or correlated) with Centor Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centor Energy has no effect on the direction of Asia Broadband i.e., Asia Broadband and Centor Energy go up and down completely randomly.

Pair Corralation between Asia Broadband and Centor Energy

If you would invest  2.69  in Asia Broadband on October 11, 2024 and sell it today you would earn a total of  0.36  from holding Asia Broadband or generate 13.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.56%
Values	Daily Returns

Asia Broadband  vs.  Centor Energy

Asia Broadband

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Broadband has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Asia Broadband is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Centor Energy

Risk-Adjusted Performance

10 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Centor Energy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Centor Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asia Broadband and Centor Energy

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

The idea behind Asia Broadband and Centor Energy 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.