Correlation Between H B and Asia Carbon

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

By analyzing existing cross correlation between H B Fuller and Asia Carbon Industries, you can compare the effects of market volatilities on H B and Asia Carbon 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 H B with a short position of Asia Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of H B and Asia Carbon.

Diversification Opportunities for H B and Asia Carbon

0.0

Correlation Coefficient

H B  Asia Carbon

Pay attention - limited upside

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

Pair Corralation between H B and Asia Carbon

If you would invest  7,497  in H B Fuller on September 14, 2024 and sell it today you would lose (152.00) from holding H B Fuller or give up 2.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.63%
Values	Daily Returns

H B Fuller  vs.  Asia Carbon Industries

H B Fuller

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H B Fuller has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Asia Carbon Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Carbon Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Asia Carbon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with H B and Asia Carbon

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

The idea behind H B Fuller and Asia Carbon Industries 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.