Correlation Between 1369 Construction and Asia Commercial

Can any of the company-specific risk be diversified away by investing in both 1369 Construction and Asia Commercial 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 1369 Construction and Asia Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 1369 Construction JSC and Asia Commercial Bank, you can compare the effects of market volatilities on 1369 Construction and Asia Commercial 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 1369 Construction with a short position of Asia Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1369 Construction and Asia Commercial.

Diversification Opportunities for 1369 Construction and Asia Commercial

0.54

Correlation Coefficient

1369 Construction  Asia Commercial

Very weak diversification

The 3 months correlation between 1369 and Asia is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding 1369 Construction JSC and Asia Commercial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Commercial Bank and 1369 Construction 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 1369 Construction JSC are associated (or correlated) with Asia Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Commercial Bank has no effect on the direction of 1369 Construction i.e., 1369 Construction and Asia Commercial go up and down completely randomly.

Pair Corralation between 1369 Construction and Asia Commercial

Assuming the 90 days trading horizon 1369 Construction JSC is expected to under-perform the Asia Commercial. But the stock apears to be less risky and, when comparing its historical volatility, 1369 Construction JSC is 1.01 times less risky than Asia Commercial. The stock trades about -0.01 of its potential returns per unit of risk. The Asia Commercial Bank is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,339,544  in Asia Commercial Bank on October 9, 2024 and sell it today you would earn a total of  140,456  from holding Asia Commercial Bank or generate 6.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.46%
Values	Daily Returns

1369 Construction JSC  vs.  Asia Commercial Bank

1369 Construction JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 1369 Construction JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Asia Commercial Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Commercial Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, Asia Commercial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with 1369 Construction and Asia Commercial

The main advantage of trading using opposite 1369 Construction and Asia Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1369 Construction position performs unexpectedly, Asia Commercial 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 Commercial will offset losses from the drop in Asia Commercial's long position.

The idea behind 1369 Construction JSC and Asia Commercial Bank 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.