Correlation Between AIRA Factoring and Asia Biomass

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

By analyzing existing cross correlation between AIRA Factoring Public and Asia Biomass Public, you can compare the effects of market volatilities on AIRA Factoring and Asia Biomass 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 AIRA Factoring with a short position of Asia Biomass. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIRA Factoring and Asia Biomass.

Diversification Opportunities for AIRA Factoring and Asia Biomass

-0.27

Correlation Coefficient

AIRA Factoring  Asia Biomass

Very good diversification

The 3 months correlation between AIRA and Asia is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding AIRA Factoring Public and Asia Biomass Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Biomass Public and AIRA Factoring 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 AIRA Factoring Public are associated (or correlated) with Asia Biomass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Biomass Public has no effect on the direction of AIRA Factoring i.e., AIRA Factoring and Asia Biomass go up and down completely randomly.

Pair Corralation between AIRA Factoring and Asia Biomass

Assuming the 90 days horizon AIRA Factoring Public is expected to under-perform the Asia Biomass. But the stock apears to be less risky and, when comparing its historical volatility, AIRA Factoring Public is 12.77 times less risky than Asia Biomass. The stock trades about -0.01 of its potential returns per unit of risk. The Asia Biomass Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  189.00  in Asia Biomass Public on September 28, 2024 and sell it today you would lose (81.00) from holding Asia Biomass Public or give up 42.86% of portfolio value over 90 days.

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

AIRA Factoring Public  vs.  Asia Biomass Public

AIRA Factoring Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AIRA Factoring Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, AIRA Factoring is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Asia Biomass Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Biomass Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with AIRA Factoring and Asia Biomass

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

The idea behind AIRA Factoring Public and Asia Biomass 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.