Correlation Between ASN Broker and Prime Road

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

By analyzing existing cross correlation between ASN Broker Public and Prime Road Power, you can compare the effects of market volatilities on ASN Broker and Prime Road 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 ASN Broker with a short position of Prime Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASN Broker and Prime Road.

Diversification Opportunities for ASN Broker and Prime Road

0.9

Correlation Coefficient

ASN Broker  Prime Road

Almost no diversification

The 3 months correlation between ASN and Prime is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding ASN Broker Public and Prime Road Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Road Power and ASN Broker 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 ASN Broker Public are associated (or correlated) with Prime Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Road Power has no effect on the direction of ASN Broker i.e., ASN Broker and Prime Road go up and down completely randomly.

Pair Corralation between ASN Broker and Prime Road

Assuming the 90 days trading horizon ASN Broker Public is expected to generate 0.5 times more return on investment than Prime Road. However, ASN Broker Public is 2.0 times less risky than Prime Road. It trades about -0.1 of its potential returns per unit of risk. Prime Road Power is currently generating about -0.16 per unit of risk. If you would invest  164.00  in ASN Broker Public on November 28, 2024 and sell it today you would lose (40.00) from holding ASN Broker Public or give up 24.39% of portfolio value over 90 days.

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

ASN Broker Public  vs.  Prime Road Power

ASN Broker Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days ASN Broker 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 March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Prime Road Power

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prime Road Power 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 drivers remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with ASN Broker and Prime Road

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

The idea behind ASN Broker Public and Prime Road Power 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.