Correlation Between Astar and Far Eastern

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

By analyzing existing cross correlation between Astar and Far Eastern International, you can compare the effects of market volatilities on Astar and Far Eastern 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 Astar with a short position of Far Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Far Eastern.

Diversification Opportunities for Astar and Far Eastern

0.61

Correlation Coefficient

Astar  Far Eastern

Poor diversification

The 3 months correlation between Astar and Far is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Far Eastern International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Far Eastern International and Astar 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 Astar are associated (or correlated) with Far Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Far Eastern International has no effect on the direction of Astar i.e., Astar and Far Eastern go up and down completely randomly.

Pair Corralation between Astar and Far Eastern

Assuming the 90 days trading horizon Astar is expected to generate 7.35 times more return on investment than Far Eastern. However, Astar is 7.35 times more volatile than Far Eastern International. It trades about 0.04 of its potential returns per unit of risk. Far Eastern International is currently generating about 0.03 per unit of risk. If you would invest  4.75  in Astar on October 12, 2024 and sell it today you would earn a total of  1.26  from holding Astar or generate 26.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	61.62%
Values	Daily Returns

Astar  vs.  Far Eastern International

Astar

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Astar is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Far Eastern International

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Far Eastern International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Far Eastern is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Astar and Far Eastern

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

The idea behind Astar and Far Eastern International 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.