Correlation Between Asia Metal and Grande Hospitality

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

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

Diversification Opportunities for Asia Metal and Grande Hospitality

0.24

Correlation Coefficient

Asia Metal  Grande Hospitality

Modest diversification

The 3 months correlation between Asia and Grande is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Asia Metal Public and Grande Hospitality Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grande Hospitality Real and Asia Metal 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 Metal Public are associated (or correlated) with Grande Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grande Hospitality Real has no effect on the direction of Asia Metal i.e., Asia Metal and Grande Hospitality go up and down completely randomly.

Pair Corralation between Asia Metal and Grande Hospitality

Assuming the 90 days trading horizon Asia Metal Public is expected to under-perform the Grande Hospitality. But the stock apears to be less risky and, when comparing its historical volatility, Asia Metal Public is 1.0 times less risky than Grande Hospitality. The stock trades about -0.17 of its potential returns per unit of risk. The Grande Hospitality Real is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  670.00  in Grande Hospitality Real on September 4, 2024 and sell it today you would lose (10.00) from holding Grande Hospitality Real or give up 1.49% of portfolio value over 90 days.

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

Asia Metal Public  vs.  Grande Hospitality Real

Asia Metal Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

Grande Hospitality Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grande Hospitality Real has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Grande Hospitality is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Asia Metal and Grande Hospitality

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

The idea behind Asia Metal Public and Grande Hospitality Real 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..