Correlation Between DIC Holdings and Asia Commercial

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

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

Diversification Opportunities for DIC Holdings and Asia Commercial

-0.32

Correlation Coefficient

DIC Holdings  Asia Commercial

Very good diversification

The 3 months correlation between DIC and Asia is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding DIC Holdings Construction 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 DIC Holdings 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 DIC Holdings Construction 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 DIC Holdings i.e., DIC Holdings and Asia Commercial go up and down completely randomly.

Pair Corralation between DIC Holdings and Asia Commercial

Assuming the 90 days trading horizon DIC Holdings Construction is expected to under-perform the Asia Commercial. In addition to that, DIC Holdings is 3.41 times more volatile than Asia Commercial Bank. It trades about -0.27 of its total potential returns per unit of risk. Asia Commercial Bank is currently generating about -0.08 per unit of volatility. If you would invest  2,535,000  in Asia Commercial Bank on October 11, 2024 and sell it today you would lose (40,000) from holding Asia Commercial Bank or give up 1.58% of portfolio value over 90 days.

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

DIC Holdings Construction  vs.  Asia Commercial Bank

DIC Holdings Construction

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DIC Holdings Construction are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, DIC Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 DIC Holdings and Asia Commercial

The main advantage of trading using opposite DIC Holdings and Asia Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DIC Holdings 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 DIC Holdings Construction 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.