Correlation Between Asia Metal and Rich Sport

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

Diversification Opportunities for Asia Metal and Rich Sport

0.57

Correlation Coefficient

Asia Metal  Rich Sport

Very weak diversification

The 3 months correlation between Asia and Rich is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Asia Metal Public and Rich Sport Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rich Sport Public 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 Rich Sport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rich Sport Public has no effect on the direction of Asia Metal i.e., Asia Metal and Rich Sport go up and down completely randomly.

Pair Corralation between Asia Metal and Rich Sport

Assuming the 90 days trading horizon Asia Metal Public is expected to under-perform the Rich Sport. But the stock apears to be less risky and, when comparing its historical volatility, Asia Metal Public is 31.23 times less risky than Rich Sport. The stock trades about -0.02 of its potential returns per unit of risk. The Rich Sport Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  212.00  in Rich Sport Public on September 24, 2024 and sell it today you would lose (28.00) from holding Rich Sport Public or give up 13.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Asia Metal Public  vs.  Rich Sport Public

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 conflicting performance in the last few months, the Stock's fundamental 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.

Rich Sport Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rich Sport Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic 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 Asia Metal and Rich Sport

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

The idea behind Asia Metal Public and Rich Sport 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.