Correlation Between Alumina and Asahi Kaisei

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

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

Diversification Opportunities for Alumina and Asahi Kaisei

0.0

Correlation Coefficient

Alumina  Asahi Kaisei

Pay attention - limited upside

The 3 months correlation between Alumina and Asahi is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alumina Limited and Asahi Kaisei Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asahi Kaisei Corp and Alumina 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 Alumina Limited are associated (or correlated) with Asahi Kaisei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asahi Kaisei Corp has no effect on the direction of Alumina i.e., Alumina and Asahi Kaisei go up and down completely randomly.

Pair Corralation between Alumina and Asahi Kaisei

If you would invest  1,377  in Asahi Kaisei Corp on December 29, 2024 and sell it today you would earn a total of  78.00  from holding Asahi Kaisei Corp or generate 5.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Alumina Limited  vs.  Asahi Kaisei Corp

Alumina Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alumina Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Alumina is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Asahi Kaisei Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asahi Kaisei Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Asahi Kaisei is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alumina and Asahi Kaisei

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

The idea behind Alumina Limited and Asahi Kaisei 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.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.