Correlation Between Ascendas India and Generation Income

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

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

Diversification Opportunities for Ascendas India and Generation Income

0.6

Correlation Coefficient

Ascendas India  Generation Income

Poor diversification

The 3 months correlation between Ascendas and Generation is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ascendas India Trust and Generation Income Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generation Income and Ascendas India 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 Ascendas India Trust are associated (or correlated) with Generation Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generation Income has no effect on the direction of Ascendas India i.e., Ascendas India and Generation Income go up and down completely randomly.

Pair Corralation between Ascendas India and Generation Income

Assuming the 90 days horizon Ascendas India Trust is expected to under-perform the Generation Income. But the pink sheet apears to be less risky and, when comparing its historical volatility, Ascendas India Trust is 10.22 times less risky than Generation Income. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Generation Income Properties is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Generation Income Properties on September 14, 2024 and sell it today you would lose (3.00) from holding Generation Income Properties or give up 13.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	32.81%
Values	Daily Returns

Ascendas India Trust  vs.  Generation Income Properties

Ascendas India Trust

Risk-Adjusted Performance

0 of 100

Very Weak

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

Generation Income

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Generation Income Properties are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Generation Income showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ascendas India and Generation Income

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

The idea behind Ascendas India Trust and Generation Income Properties 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.

Check out your portfolio center.

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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.