Correlation Between Ama Marine and Asia Biomass

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

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

Diversification Opportunities for Ama Marine and Asia Biomass

0.08

Correlation Coefficient

Ama Marine  Asia Biomass

Significant diversification

The 3 months correlation between Ama and Asia is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ama Marine 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 Ama Marine 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 Ama Marine 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 Ama Marine i.e., Ama Marine and Asia Biomass go up and down completely randomly.

Pair Corralation between Ama Marine and Asia Biomass

Assuming the 90 days trading horizon Ama Marine is expected to generate 65.05 times less return on investment than Asia Biomass. But when comparing it to its historical volatility, Ama Marine Public is 37.57 times less risky than Asia Biomass. It trades about 0.03 of its potential returns per unit of risk. Asia Biomass Public is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  145.00  in Asia Biomass Public on September 28, 2024 and sell it today you would lose (37.00) from holding Asia Biomass Public or give up 25.52% of portfolio value over 90 days.

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

Ama Marine Public  vs.  Asia Biomass Public

Ama Marine Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ama Marine Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company 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 Ama Marine and Asia Biomass

The main advantage of trading using opposite Ama Marine and Asia Biomass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ama Marine 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 Ama Marine 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.