Correlation Between Ai Energy and Asian Insulators

Can any of the company-specific risk be diversified away by investing in both Ai Energy and Asian Insulators 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 Ai Energy and Asian Insulators into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ai Energy Public and Asian Insulators PCL, you can compare the effects of market volatilities on Ai Energy and Asian Insulators 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 Ai Energy with a short position of Asian Insulators. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ai Energy and Asian Insulators.

Diversification Opportunities for Ai Energy and Asian Insulators

0.73

Correlation Coefficient

Ai Energy  Asian Insulators

Poor diversification

The 3 months correlation between AIE and Asian is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ai Energy Public and Asian Insulators PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asian Insulators PCL and Ai Energy 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 Ai Energy Public are associated (or correlated) with Asian Insulators. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asian Insulators PCL has no effect on the direction of Ai Energy i.e., Ai Energy and Asian Insulators go up and down completely randomly.

Pair Corralation between Ai Energy and Asian Insulators

Assuming the 90 days trading horizon Ai Energy Public is expected to generate 2.5 times more return on investment than Asian Insulators. However, Ai Energy is 2.5 times more volatile than Asian Insulators PCL. It trades about 0.12 of its potential returns per unit of risk. Asian Insulators PCL is currently generating about 0.04 per unit of risk. If you would invest  93.00  in Ai Energy Public on December 19, 2024 and sell it today you would earn a total of  47.00  from holding Ai Energy Public or generate 50.54% return on investment over 90 days.

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

Ai Energy Public  vs.  Asian Insulators PCL

Ai Energy Public

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ai Energy Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Ai Energy disclosed solid returns over the last few months and may actually be approaching a breakup point.

Asian Insulators PCL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Asian Insulators PCL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Asian Insulators may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ai Energy and Asian Insulators

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

The idea behind Ai Energy Public and Asian Insulators PCL 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..