Correlation Between Asahi Kaisei and Altech Batteries

Can any of the company-specific risk be diversified away by investing in both Asahi Kaisei and Altech Batteries 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 Asahi Kaisei and Altech Batteries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asahi Kaisei Corp and Altech Batteries Limited, you can compare the effects of market volatilities on Asahi Kaisei and Altech Batteries 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 Asahi Kaisei with a short position of Altech Batteries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asahi Kaisei and Altech Batteries.

Diversification Opportunities for Asahi Kaisei and Altech Batteries

0.14

Correlation Coefficient

Asahi Kaisei  Altech Batteries

Average diversification

The 3 months correlation between Asahi and Altech is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Asahi Kaisei Corp and Altech Batteries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altech Batteries and Asahi Kaisei 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 Asahi Kaisei Corp are associated (or correlated) with Altech Batteries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altech Batteries has no effect on the direction of Asahi Kaisei i.e., Asahi Kaisei and Altech Batteries go up and down completely randomly.

Pair Corralation between Asahi Kaisei and Altech Batteries

Assuming the 90 days horizon Asahi Kaisei Corp is expected to generate 0.2 times more return on investment than Altech Batteries. However, Asahi Kaisei Corp is 5.0 times less risky than Altech Batteries. It trades about 0.08 of its potential returns per unit of risk. Altech Batteries Limited is currently generating about -0.01 per unit of risk. If you would invest  1,377  in Asahi Kaisei Corp on December 29, 2024 and sell it today you would earn a total of  78.00  from holding Asahi Kaisei Corp or generate 5.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Asahi Kaisei Corp  vs.  Altech Batteries Limited

Asahi Kaisei Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asahi Kaisei Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Asahi Kaisei is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Altech Batteries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Altech Batteries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Altech Batteries is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Asahi Kaisei and Altech Batteries

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

The idea behind Asahi Kaisei Corp and Altech Batteries Limited 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.