Correlation Between COL Financial and Asia United

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

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

Diversification Opportunities for COL Financial and Asia United

-0.16

Correlation Coefficient

COL Financial  Asia United

Good diversification

The 3 months correlation between COL and Asia is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding COL Financial Group and Asia United Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia United Bank and COL Financial 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 COL Financial Group are associated (or correlated) with Asia United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia United Bank has no effect on the direction of COL Financial i.e., COL Financial and Asia United go up and down completely randomly.

Pair Corralation between COL Financial and Asia United

Assuming the 90 days trading horizon COL Financial Group is expected to under-perform the Asia United. In addition to that, COL Financial is 2.57 times more volatile than Asia United Bank. It trades about -0.05 of its total potential returns per unit of risk. Asia United Bank is currently generating about -0.04 per unit of volatility. If you would invest  6,250  in Asia United Bank on September 25, 2024 and sell it today you would lose (60.00) from holding Asia United Bank or give up 0.96% of portfolio value over 90 days.

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

COL Financial Group  vs.  Asia United Bank

COL Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COL Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Asia United Bank

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Asia United Bank are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Asia United exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COL Financial and Asia United

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

The idea behind COL Financial Group and Asia United 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.