Correlation Between Asia Plus and IRPC Public

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

Diversification Opportunities for Asia Plus and IRPC Public

0.9

Correlation Coefficient

Asia Plus  IRPC Public

Almost no diversification

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

Pair Corralation between Asia Plus and IRPC Public

Assuming the 90 days trading horizon Asia Plus Group is expected to generate 0.36 times more return on investment than IRPC Public. However, Asia Plus Group is 2.78 times less risky than IRPC Public. It trades about -0.12 of its potential returns per unit of risk. IRPC Public is currently generating about -0.18 per unit of risk. If you would invest  234.00  in Asia Plus Group on October 23, 2024 and sell it today you would lose (4.00) from holding Asia Plus Group or give up 1.71% of portfolio value over 90 days.

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

Asia Plus Group  vs.  IRPC Public

Asia Plus Group

Risk-Adjusted Performance

0 of 100

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.

IRPC Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IRPC 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 forward-looking signals remain quite persistent which may send shares a bit higher in February 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 IRPC Public

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

The idea behind Asia Plus Group and IRPC Public 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.