Correlation Between ASIA Capital and ASN Broker

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

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

Diversification Opportunities for ASIA Capital and ASN Broker

-0.12

Correlation Coefficient

ASIA Capital  ASN Broker

Good diversification

The 3 months correlation between ASIA and ASN is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding ASIA Capital Group and ASN Broker Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASN Broker Public and ASIA Capital 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 Capital Group are associated (or correlated) with ASN Broker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASN Broker Public has no effect on the direction of ASIA Capital i.e., ASIA Capital and ASN Broker go up and down completely randomly.

Pair Corralation between ASIA Capital and ASN Broker

Assuming the 90 days trading horizon ASIA Capital Group is expected to generate 19.5 times more return on investment than ASN Broker. However, ASIA Capital is 19.5 times more volatile than ASN Broker Public. It trades about 0.05 of its potential returns per unit of risk. ASN Broker Public is currently generating about -0.03 per unit of risk. If you would invest  74.00  in ASIA Capital Group on October 11, 2024 and sell it today you would lose (74.00) from holding ASIA Capital Group or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

ASIA Capital Group  vs.  ASN Broker Public

ASIA Capital Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASIA Capital Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, ASIA Capital disclosed solid returns over the last few months and may actually be approaching a breakup point.

ASN Broker Public

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ASN Broker Public are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, ASN Broker may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ASIA Capital and ASN Broker

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

The idea behind ASIA Capital Group and ASN Broker 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.