Correlation Between ASX and Hub24

Can any of the company-specific risk be diversified away by investing in both ASX and Hub24 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 ASX and Hub24 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ASX and Hub24, you can compare the effects of market volatilities on ASX and Hub24 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 ASX with a short position of Hub24. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASX and Hub24.

Diversification Opportunities for ASX and Hub24

0.58

Correlation Coefficient

ASX  Hub24

Very weak diversification

The 3 months correlation between ASX and Hub24 is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding ASX and Hub24 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hub24 and ASX 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 ASX are associated (or correlated) with Hub24. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hub24 has no effect on the direction of ASX i.e., ASX and Hub24 go up and down completely randomly.

Pair Corralation between ASX and Hub24

Assuming the 90 days trading horizon ASX is expected to generate 0.61 times more return on investment than Hub24. However, ASX is 1.64 times less risky than Hub24. It trades about -0.1 of its potential returns per unit of risk. Hub24 is currently generating about -0.18 per unit of risk. If you would invest  6,678  in ASX on October 4, 2024 and sell it today you would lose (170.00) from holding ASX or give up 2.55% of portfolio value over 90 days.

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

ASX  vs.  Hub24

ASX

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ASX are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ASX is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Hub24

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hub24 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Hub24 unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASX and Hub24

The main advantage of trading using opposite ASX and Hub24 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASX position performs unexpectedly, Hub24 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 Hub24 will offset losses from the drop in Hub24's long position.

The idea behind ASX and Hub24 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.