Correlation Between ASIA Capital and TPI POLENE

Can any of the company-specific risk be diversified away by investing in both ASIA Capital and TPI POLENE 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 TPI POLENE 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 TPI POLENE POWER, you can compare the effects of market volatilities on ASIA Capital and TPI POLENE 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 TPI POLENE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASIA Capital and TPI POLENE.

Diversification Opportunities for ASIA Capital and TPI POLENE

0.92

Correlation Coefficient

ASIA Capital  TPI POLENE

Almost no diversification

The 3 months correlation between ASIA and TPI is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding ASIA Capital Group and TPI POLENE POWER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPI POLENE POWER 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 TPI POLENE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPI POLENE POWER has no effect on the direction of ASIA Capital i.e., ASIA Capital and TPI POLENE go up and down completely randomly.

Pair Corralation between ASIA Capital and TPI POLENE

Assuming the 90 days trading horizon ASIA Capital Group is expected to generate 1.41 times more return on investment than TPI POLENE. However, ASIA Capital is 1.41 times more volatile than TPI POLENE POWER. It trades about 0.08 of its potential returns per unit of risk. TPI POLENE POWER is currently generating about 0.06 per unit of risk. If you would invest  33.00  in ASIA Capital Group on October 5, 2024 and sell it today you would earn a total of  0.00  from holding ASIA Capital Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.61%
Values	Daily Returns

ASIA Capital Group  vs.  TPI POLENE POWER

ASIA Capital Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASIA Capital Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, ASIA Capital disclosed solid returns over the last few months and may actually be approaching a breakup point.

TPI POLENE POWER

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TPI POLENE POWER are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, TPI POLENE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASIA Capital and TPI POLENE

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

The idea behind ASIA Capital Group and TPI POLENE POWER 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.