Correlation Between Asia Plus and Fine Metal

Can any of the company-specific risk be diversified away by investing in both Asia Plus and Fine Metal 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 Fine Metal 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 Fine Metal Technologies, you can compare the effects of market volatilities on Asia Plus and Fine Metal 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 Fine Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Plus and Fine Metal.

Diversification Opportunities for Asia Plus and Fine Metal

0.86

Correlation Coefficient

Asia Plus  Fine Metal

Very poor diversification

The 3 months correlation between Asia and Fine is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Asia Plus Group and Fine Metal Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fine Metal Technologies 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 Fine Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fine Metal Technologies has no effect on the direction of Asia Plus i.e., Asia Plus and Fine Metal go up and down completely randomly.

Pair Corralation between Asia Plus and Fine Metal

Assuming the 90 days trading horizon Asia Plus Group is expected to generate 0.5 times more return on investment than Fine Metal. However, Asia Plus Group is 1.99 times less risky than Fine Metal. It trades about -0.2 of its potential returns per unit of risk. Fine Metal Technologies is currently generating about -0.17 per unit of risk. If you would invest  225.00  in Asia Plus Group on December 21, 2024 and sell it today you would lose (26.00) from holding Asia Plus Group or give up 11.56% of portfolio value over 90 days.

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

Asia Plus Group  vs.  Fine Metal Technologies

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.

Fine Metal Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fine Metal Technologies 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 basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Asia Plus and Fine Metal

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

The idea behind Asia Plus Group and Fine Metal Technologies 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.