Correlation Between Astar and CGA Old

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

By analyzing existing cross correlation between Astar and CGA Old, you can compare the effects of market volatilities on Astar and CGA Old 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 CGA Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and CGA Old.

Diversification Opportunities for Astar and CGA Old

0.5

Correlation Coefficient

Astar  CGA Old

Very weak diversification

The 3 months correlation between Astar and CGA is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Astar and CGA Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGA Old 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 CGA Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGA Old has no effect on the direction of Astar i.e., Astar and CGA Old go up and down completely randomly.

Pair Corralation between Astar and CGA Old

If you would invest  198.00  in CGA Old on October 26, 2024 and sell it today you would earn a total of  0.00  from holding CGA Old or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.65%
Values	Daily Returns

Astar  vs.  CGA Old

Astar

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Astar has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

CGA Old

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days CGA Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat unfluctuating technical and fundamental indicators, CGA Old sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astar and CGA Old

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

The idea behind Astar and CGA Old 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..