Correlation Between Asia Medical and Asian Alliance

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

By analyzing existing cross correlation between Asia Medical Agricultural and Asian Alliance International, you can compare the effects of market volatilities on Asia Medical and Asian Alliance 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 Asia Medical with a short position of Asian Alliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Medical and Asian Alliance.

Diversification Opportunities for Asia Medical and Asian Alliance

0.68

Correlation Coefficient

Asia Medical  Asian Alliance

Poor diversification

The 3 months correlation between Asia and Asian is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Asia Medical Agricultural and Asian Alliance International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asian Alliance Inter and Asia Medical 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 Asia Medical Agricultural are associated (or correlated) with Asian Alliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asian Alliance Inter has no effect on the direction of Asia Medical i.e., Asia Medical and Asian Alliance go up and down completely randomly.

Pair Corralation between Asia Medical and Asian Alliance

Assuming the 90 days trading horizon Asia Medical Agricultural is expected to generate 0.89 times more return on investment than Asian Alliance. However, Asia Medical Agricultural is 1.12 times less risky than Asian Alliance. It trades about -0.03 of its potential returns per unit of risk. Asian Alliance International is currently generating about -0.08 per unit of risk. If you would invest  124.00  in Asia Medical Agricultural on December 21, 2024 and sell it today you would lose (5.00) from holding Asia Medical Agricultural or give up 4.03% of portfolio value over 90 days.

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

Asia Medical Agricultural  vs.  Asian Alliance International

Asia Medical Agricultural

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asia Medical Agricultural has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Asia Medical is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Asian Alliance Inter

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Asia Medical and Asian Alliance

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

The idea behind Asia Medical Agricultural and Asian Alliance International 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.