Correlation Between Betashares Asia and ETFS ROBO

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

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

Diversification Opportunities for Betashares Asia and ETFS ROBO

0.72

Correlation Coefficient

Betashares Asia  ETFS ROBO

Poor diversification

The 3 months correlation between Betashares and ETFS is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Betashares Asia Technology and ETFS ROBO Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS ROBO Global and Betashares Asia 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 Betashares Asia Technology are associated (or correlated) with ETFS ROBO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS ROBO Global has no effect on the direction of Betashares Asia i.e., Betashares Asia and ETFS ROBO go up and down completely randomly.

Pair Corralation between Betashares Asia and ETFS ROBO

Assuming the 90 days trading horizon Betashares Asia Technology is expected to generate 1.39 times more return on investment than ETFS ROBO. However, Betashares Asia is 1.39 times more volatile than ETFS ROBO Global. It trades about 0.1 of its potential returns per unit of risk. ETFS ROBO Global is currently generating about 0.12 per unit of risk. If you would invest  875.00  in Betashares Asia Technology on September 3, 2024 and sell it today you would earn a total of  77.00  from holding Betashares Asia Technology or generate 8.8% return on investment over 90 days.

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

Betashares Asia Technology  vs.  ETFS ROBO Global

Betashares Asia Tech

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Betashares Asia Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Betashares Asia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ETFS ROBO Global

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ETFS ROBO Global are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ETFS ROBO may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Betashares Asia and ETFS ROBO

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

The idea behind Betashares Asia Technology and ETFS ROBO Global 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.