Correlation Between Boutique Newcity and Asia Fiber

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

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

Diversification Opportunities for Boutique Newcity and Asia Fiber

0.64

Correlation Coefficient

Boutique Newcity  Asia Fiber

Poor diversification

The 3 months correlation between Boutique and Asia is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Boutique Newcity Public and Asia Fiber Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Fiber Public and Boutique Newcity 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 Boutique Newcity Public are associated (or correlated) with Asia Fiber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Fiber Public has no effect on the direction of Boutique Newcity i.e., Boutique Newcity and Asia Fiber go up and down completely randomly.

Pair Corralation between Boutique Newcity and Asia Fiber

Assuming the 90 days trading horizon Boutique Newcity Public is expected to under-perform the Asia Fiber. In addition to that, Boutique Newcity is 1.58 times more volatile than Asia Fiber Public. It trades about -0.13 of its total potential returns per unit of risk. Asia Fiber Public is currently generating about -0.14 per unit of volatility. If you would invest  480.00  in Asia Fiber Public on December 1, 2024 and sell it today you would lose (80.00) from holding Asia Fiber Public or give up 16.67% of portfolio value over 90 days.

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

Boutique Newcity Public  vs.  Asia Fiber Public

Boutique Newcity Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boutique Newcity Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Asia Fiber Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asia Fiber Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Boutique Newcity and Asia Fiber

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

The idea behind Boutique Newcity Public and Asia Fiber Public 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.