Correlation Between Asia Plus and Asian Sea

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

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

Diversification Opportunities for Asia Plus and Asian Sea

-0.29

Correlation Coefficient

Asia Plus  Asian Sea

Very good diversification

The 3 months correlation between Asia and Asian is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Asia Plus Group and Asian Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asian Sea and Asia Plus 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 Plus Group are associated (or correlated) with Asian Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asian Sea has no effect on the direction of Asia Plus i.e., Asia Plus and Asian Sea go up and down completely randomly.

Pair Corralation between Asia Plus and Asian Sea

Assuming the 90 days trading horizon Asia Plus Group is expected to under-perform the Asian Sea. But the stock apears to be less risky and, when comparing its historical volatility, Asia Plus Group is 1.93 times less risky than Asian Sea. The stock trades about -0.19 of its potential returns per unit of risk. The Asian Sea is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  780.00  in Asian Sea on December 20, 2024 and sell it today you would earn a total of  45.00  from holding Asian Sea or generate 5.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Asia Plus Group  vs.  Asian Sea

Asia Plus Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asia Plus Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Asian Sea

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asian Sea are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Asian Sea may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Asia Plus and Asian Sea

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

The idea behind Asia Plus Group and Asian Sea 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.