Correlation Between Asiabasemetals and Income Financial

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

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

Diversification Opportunities for Asiabasemetals and Income Financial

0.74

Correlation Coefficient

Asiabasemetals  Income Financial

Poor diversification

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

Pair Corralation between Asiabasemetals and Income Financial

Assuming the 90 days horizon Asiabasemetals is expected to under-perform the Income Financial. In addition to that, Asiabasemetals is 2.44 times more volatile than Income Financial Trust. It trades about -0.07 of its total potential returns per unit of risk. Income Financial Trust is currently generating about -0.02 per unit of volatility. If you would invest  850.00  in Income Financial Trust on December 26, 2024 and sell it today you would lose (22.00) from holding Income Financial Trust or give up 2.59% of portfolio value over 90 days.

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

Asiabasemetals  vs.  Income Financial Trust

Asiabasemetals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asiabasemetals 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.

Income Financial Trust

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Asiabasemetals and Income Financial

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

The idea behind Asiabasemetals and Income Financial Trust 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.