Correlation Between Asia Carbon and Incitec Pivot

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

By analyzing existing cross correlation between Asia Carbon Industries and Incitec Pivot Ltd, you can compare the effects of market volatilities on Asia Carbon and Incitec Pivot 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 Carbon with a short position of Incitec Pivot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Carbon and Incitec Pivot.

Diversification Opportunities for Asia Carbon and Incitec Pivot

0.0

Correlation Coefficient

Asia Carbon  Incitec Pivot

Pay attention - limited upside

The 3 months correlation between Asia and Incitec is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Asia Carbon Industries and Incitec Pivot Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Incitec Pivot and Asia Carbon 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 Carbon Industries are associated (or correlated) with Incitec Pivot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Incitec Pivot has no effect on the direction of Asia Carbon i.e., Asia Carbon and Incitec Pivot go up and down completely randomly.

Pair Corralation between Asia Carbon and Incitec Pivot

If you would invest  185.00  in Incitec Pivot Ltd on October 24, 2024 and sell it today you would earn a total of  11.00  from holding Incitec Pivot Ltd or generate 5.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Asia Carbon Industries  vs.  Incitec Pivot Ltd

Asia Carbon Industries

Risk-Adjusted Performance

0 of 100

Very Weak

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

Incitec Pivot

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Incitec Pivot Ltd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Incitec Pivot is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Asia Carbon and Incitec Pivot

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

The idea behind Asia Carbon Industries and Incitec Pivot Ltd 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.