Correlation Between Asahi Group and Kirin Holdings

Can any of the company-specific risk be diversified away by investing in both Asahi Group and Kirin Holdings 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 Asahi Group and Kirin Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Asahi Group and Kirin Holdings

0.74

Correlation Coefficient

Asahi Group  Kirin Holdings

Poor diversification

The 3 months correlation between Asahi and Kirin is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Asahi Group Holdings and Kirin Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kirin Holdings and Asahi Group 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 Asahi Group Holdings are associated (or correlated) with Kirin Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kirin Holdings has no effect on the direction of Asahi Group i.e., Asahi Group and Kirin Holdings go up and down completely randomly.

Pair Corralation between Asahi Group and Kirin Holdings

Assuming the 90 days horizon Asahi Group Holdings is expected to under-perform the Kirin Holdings. In addition to that, Asahi Group is 1.46 times more volatile than Kirin Holdings. It trades about -0.09 of its total potential returns per unit of risk. Kirin Holdings is currently generating about -0.04 per unit of volatility. If you would invest  1,360  in Kirin Holdings on September 13, 2024 and sell it today you would lose (60.00) from holding Kirin Holdings or give up 4.41% of portfolio value over 90 days.

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

Asahi Group Holdings  vs.  Kirin Holdings

Asahi Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asahi Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Kirin Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kirin Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Kirin Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Asahi Group and Kirin Holdings

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

The idea behind Asahi Group Holdings and Kirin Holdings 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.