Correlation Between Asahi Songwon and India Glycols

Can any of the company-specific risk be diversified away by investing in both Asahi Songwon and India Glycols 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 Asahi Songwon and India Glycols into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asahi Songwon Colors and India Glycols Limited, you can compare the effects of market volatilities on Asahi Songwon and India Glycols 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 Asahi Songwon with a short position of India Glycols. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asahi Songwon and India Glycols.

Diversification Opportunities for Asahi Songwon and India Glycols

0.12

Correlation Coefficient

Asahi Songwon  India Glycols

Average diversification

The 3 months correlation between Asahi and India is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Asahi Songwon Colors and India Glycols Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on India Glycols Limited and Asahi Songwon 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 Asahi Songwon Colors are associated (or correlated) with India Glycols. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of India Glycols Limited has no effect on the direction of Asahi Songwon i.e., Asahi Songwon and India Glycols go up and down completely randomly.

Pair Corralation between Asahi Songwon and India Glycols

Assuming the 90 days trading horizon Asahi Songwon is expected to generate 1.76 times less return on investment than India Glycols. In addition to that, Asahi Songwon is 1.13 times more volatile than India Glycols Limited. It trades about 0.04 of its total potential returns per unit of risk. India Glycols Limited is currently generating about 0.07 per unit of volatility. If you would invest  63,677  in India Glycols Limited on October 24, 2024 and sell it today you would earn a total of  71,623  from holding India Glycols Limited or generate 112.48% return on investment over 90 days.

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

Asahi Songwon Colors  vs.  India Glycols Limited

Asahi Songwon Colors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asahi Songwon Colors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

India Glycols Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in India Glycols Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, India Glycols may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Asahi Songwon and India Glycols

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

The idea behind Asahi Songwon Colors and India Glycols Limited 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.