Correlation Between Asia United and Filinvest REIT

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

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

Diversification Opportunities for Asia United and Filinvest REIT

0.03

Correlation Coefficient

Asia United  Filinvest REIT

Significant diversification

The 3 months correlation between Asia and Filinvest is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Asia United Bank and Filinvest REIT Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Filinvest REIT Corp and Asia United 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 Asia United Bank are associated (or correlated) with Filinvest REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Filinvest REIT Corp has no effect on the direction of Asia United i.e., Asia United and Filinvest REIT go up and down completely randomly.

Pair Corralation between Asia United and Filinvest REIT

Assuming the 90 days trading horizon Asia United Bank is expected to generate 2.09 times more return on investment than Filinvest REIT. However, Asia United is 2.09 times more volatile than Filinvest REIT Corp. It trades about 0.2 of its potential returns per unit of risk. Filinvest REIT Corp is currently generating about 0.04 per unit of risk. If you would invest  6,150  in Asia United Bank on October 26, 2024 and sell it today you would earn a total of  1,190  from holding Asia United Bank or generate 19.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Asia United Bank  vs.  Filinvest REIT Corp

Asia United Bank

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Asia United Bank are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Asia United exhibited solid returns over the last few months and may actually be approaching a breakup point.

Filinvest REIT Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Filinvest REIT Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable essential indicators, Filinvest REIT is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Asia United and Filinvest REIT

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

The idea behind Asia United Bank and Filinvest REIT Corp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.