Correlation Between Aboitiz Equity and Asia United

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

By analyzing existing cross correlation between Aboitiz Equity Ventures and Asia United Bank, you can compare the effects of market volatilities on Aboitiz Equity and Asia United 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 Aboitiz Equity with a short position of Asia United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aboitiz Equity and Asia United.

Diversification Opportunities for Aboitiz Equity and Asia United

-0.66

Correlation Coefficient

Aboitiz Equity  Asia United

Excellent diversification

The 3 months correlation between Aboitiz and Asia is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Aboitiz Equity Ventures and Asia United Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia United Bank and Aboitiz Equity 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 Aboitiz Equity Ventures are associated (or correlated) with Asia United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia United Bank has no effect on the direction of Aboitiz Equity i.e., Aboitiz Equity and Asia United go up and down completely randomly.

Pair Corralation between Aboitiz Equity and Asia United

Assuming the 90 days trading horizon Aboitiz Equity Ventures is expected to generate 1.3 times more return on investment than Asia United. However, Aboitiz Equity is 1.3 times more volatile than Asia United Bank. It trades about 0.12 of its potential returns per unit of risk. Asia United Bank is currently generating about -0.04 per unit of risk. If you would invest  3,355  in Aboitiz Equity Ventures on October 4, 2024 and sell it today you would earn a total of  80.00  from holding Aboitiz Equity Ventures or generate 2.38% return on investment over 90 days.

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

Aboitiz Equity Ventures  vs.  Asia United Bank

Aboitiz Equity Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aboitiz Equity Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Asia United Bank

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Asia United Bank are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Asia United exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aboitiz Equity and Asia United

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

The idea behind Aboitiz Equity Ventures and Asia United Bank 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.