Correlation Between ASICS and Forward Industries

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

By analyzing existing cross correlation between ASICS and Forward Industries, you can compare the effects of market volatilities on ASICS and Forward Industries 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 ASICS with a short position of Forward Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASICS and Forward Industries.

Diversification Opportunities for ASICS and Forward Industries

-0.24

Correlation Coefficient

ASICS  Forward Industries

Very good diversification

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

Pair Corralation between ASICS and Forward Industries

Assuming the 90 days horizon ASICS is expected to generate 1.6 times more return on investment than Forward Industries. However, ASICS is 1.6 times more volatile than Forward Industries. It trades about 0.1 of its potential returns per unit of risk. Forward Industries is currently generating about 0.16 per unit of risk. If you would invest  1,946  in ASICS on November 21, 2024 and sell it today you would earn a total of  331.00  from holding ASICS or generate 17.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	55.93%
Values	Daily Returns

ASICS  vs.  Forward Industries

ASICS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASICS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal fundamental indicators, ASICS reported solid returns over the last few months and may actually be approaching a breakup point.

Forward Industries

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Forward Industries are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Forward Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASICS and Forward Industries

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

The idea behind ASICS and Forward Industries 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.