Correlation Between Asia Biomass and Meta Public

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

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

Diversification Opportunities for Asia Biomass and Meta Public

0.51

Correlation Coefficient

Asia Biomass  Meta Public

Very weak diversification

The 3 months correlation between Asia and Meta is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Asia Biomass Public and Meta Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Public and Asia Biomass 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 Biomass Public are associated (or correlated) with Meta Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Public has no effect on the direction of Asia Biomass i.e., Asia Biomass and Meta Public go up and down completely randomly.

Pair Corralation between Asia Biomass and Meta Public

Assuming the 90 days trading horizon Asia Biomass Public is expected to generate 9.39 times more return on investment than Meta Public. However, Asia Biomass is 9.39 times more volatile than Meta Public. It trades about 0.04 of its potential returns per unit of risk. Meta Public is currently generating about -0.02 per unit of risk. If you would invest  202.00  in Asia Biomass Public on October 10, 2024 and sell it today you would lose (92.00) from holding Asia Biomass Public or give up 45.54% of portfolio value over 90 days.

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

Asia Biomass Public  vs.  Meta Public

Asia Biomass Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Biomass Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Meta Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meta Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Asia Biomass and Meta Public

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

The idea behind Asia Biomass Public and Meta Public 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.