Correlation Between Astar and REX FANG

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

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

Diversification Opportunities for Astar and REX FANG

0.32

Correlation Coefficient

Astar  REX FANG

Weak diversification

The 3 months correlation between Astar and REX is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Astar and REX FANG Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REX FANG Innovation 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 REX FANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REX FANG Innovation has no effect on the direction of Astar i.e., Astar and REX FANG go up and down completely randomly.

Pair Corralation between Astar and REX FANG

Assuming the 90 days trading horizon Astar is expected to under-perform the REX FANG. In addition to that, Astar is 5.5 times more volatile than REX FANG Innovation. It trades about -0.13 of its total potential returns per unit of risk. REX FANG Innovation is currently generating about 0.04 per unit of volatility. If you would invest  5,009  in REX FANG Innovation on October 26, 2024 and sell it today you would earn a total of  64.00  from holding REX FANG Innovation or generate 1.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.7%
Values	Daily Returns

Astar  vs.  REX FANG Innovation

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.

REX FANG Innovation

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in REX FANG Innovation are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, REX FANG is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Astar and REX FANG

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

The idea behind Astar and REX FANG Innovation 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.