Correlation Between Astar and Inrom Construction

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

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

Diversification Opportunities for Astar and Inrom Construction

0.4

Correlation Coefficient

Astar  Inrom Construction

Very weak diversification

The 3 months correlation between Astar and Inrom is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Inrom Construction Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inrom Construction 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 Inrom Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inrom Construction has no effect on the direction of Astar i.e., Astar and Inrom Construction go up and down completely randomly.

Pair Corralation between Astar and Inrom Construction

Assuming the 90 days trading horizon Astar is expected to under-perform the Inrom Construction. In addition to that, Astar is 2.32 times more volatile than Inrom Construction Industries. It trades about -0.02 of its total potential returns per unit of risk. Inrom Construction Industries is currently generating about 0.14 per unit of volatility. If you would invest  119,233  in Inrom Construction Industries on October 12, 2024 and sell it today you would earn a total of  56,267  from holding Inrom Construction Industries or generate 47.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	84.43%
Values	Daily Returns

Astar  vs.  Inrom Construction Industries

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.

Inrom Construction

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Inrom Construction Industries are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Inrom Construction sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astar and Inrom Construction

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

The idea behind Astar and Inrom Construction Industries 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.