Correlation Between Asia Global and American Nortel

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

By analyzing existing cross correlation between Asia Global Crossing and American Nortel Communications, you can compare the effects of market volatilities on Asia Global and American Nortel 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 Global with a short position of American Nortel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Global and American Nortel.

Diversification Opportunities for Asia Global and American Nortel

0.0

Correlation Coefficient

Asia Global  American Nortel

Pay attention - limited upside

The 3 months correlation between Asia and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Asia Global Crossing and American Nortel Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Nortel Comm and Asia Global 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 Global Crossing are associated (or correlated) with American Nortel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Nortel Comm has no effect on the direction of Asia Global i.e., Asia Global and American Nortel go up and down completely randomly.

Pair Corralation between Asia Global and American Nortel

If you would invest  2.30  in American Nortel Communications on December 29, 2024 and sell it today you would earn a total of  0.20  from holding American Nortel Communications or generate 8.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Asia Global Crossing  vs.  American Nortel Communications

Asia Global Crossing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asia Global Crossing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Asia Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

American Nortel Comm

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Nortel Communications are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, American Nortel displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asia Global and American Nortel

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

The idea behind Asia Global Crossing and American Nortel Communications 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.