Correlation Between Asia Medical and Grande Asset

Can any of the company-specific risk be diversified away by investing in both Asia Medical and Grande Asset 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 Grande Asset 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 Grande Asset Hotels, you can compare the effects of market volatilities on Asia Medical and Grande Asset 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 Grande Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Medical and Grande Asset.

Diversification Opportunities for Asia Medical and Grande Asset

-0.36

Correlation Coefficient

Asia Medical  Grande Asset

Very good diversification

The 3 months correlation between Asia and Grande is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Asia Medical Agricultural and Grande Asset Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grande Asset Hotels 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 Grande Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grande Asset Hotels has no effect on the direction of Asia Medical i.e., Asia Medical and Grande Asset go up and down completely randomly.

Pair Corralation between Asia Medical and Grande Asset

Assuming the 90 days trading horizon Asia Medical Agricultural is expected to generate 0.32 times more return on investment than Grande Asset. However, Asia Medical Agricultural is 3.1 times less risky than Grande Asset. It trades about 0.05 of its potential returns per unit of risk. Grande Asset Hotels is currently generating about 0.01 per unit of risk. If you would invest  134.00  in Asia Medical Agricultural on September 12, 2024 and sell it today you would earn a total of  8.00  from holding Asia Medical Agricultural or generate 5.97% return on investment over 90 days.

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

Asia Medical Agricultural  vs.  Grande Asset Hotels

Asia Medical Agricultural

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Medical Agricultural are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Asia Medical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Grande Asset Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Asia Medical and Grande Asset

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

The idea behind Asia Medical Agricultural and Grande Asset Hotels 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.