Correlation Between Generation Asia and China De

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

By analyzing existing cross correlation between Generation Asia I and China De Xiao, you can compare the effects of market volatilities on Generation Asia and China De 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 Generation Asia with a short position of China De. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generation Asia and China De.

Diversification Opportunities for Generation Asia and China De

-0.53

Correlation Coefficient

Generation Asia  China De

Excellent diversification

The 3 months correlation between Generation and China is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Generation Asia I and China De Xiao in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China De Xiao and Generation Asia 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 Generation Asia I are associated (or correlated) with China De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China De Xiao has no effect on the direction of Generation Asia i.e., Generation Asia and China De go up and down completely randomly.

Pair Corralation between Generation Asia and China De

Considering the 90-day investment horizon Generation Asia I is expected to generate 0.02 times more return on investment than China De. However, Generation Asia I is 43.17 times less risky than China De. It trades about 0.36 of its potential returns per unit of risk. China De Xiao is currently generating about -0.13 per unit of risk. If you would invest  1,132  in Generation Asia I on October 25, 2024 and sell it today you would earn a total of  8.00  from holding Generation Asia I or generate 0.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	22.03%
Values	Daily Returns

Generation Asia I  vs.  China De Xiao

Generation Asia I

Risk-Adjusted Performance

0 of 100

Strong

Over the last 90 days Generation Asia I has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Generation Asia is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

China De Xiao

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China De Xiao has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Generation Asia and China De

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

The idea behind Generation Asia I and China De Xiao 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.