Correlation Between Generation Asia and Integrated Rail

Can any of the company-specific risk be diversified away by investing in both Generation Asia and Integrated Rail 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 Integrated Rail 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 Integrated Rail and, you can compare the effects of market volatilities on Generation Asia and Integrated Rail 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 Integrated Rail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generation Asia and Integrated Rail.

Diversification Opportunities for Generation Asia and Integrated Rail

0.45

Correlation Coefficient

Generation Asia  Integrated Rail

Very weak diversification

The 3 months correlation between Generation and Integrated is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Generation Asia I and Integrated Rail and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Rail 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 Integrated Rail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Rail has no effect on the direction of Generation Asia i.e., Generation Asia and Integrated Rail go up and down completely randomly.

Pair Corralation between Generation Asia and Integrated Rail

If you would invest  1,120  in Generation Asia I on September 14, 2024 and sell it today you would earn a total of  20.00  from holding Generation Asia I or generate 1.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	2.38%
Values	Daily Returns

Generation Asia I  vs.  Integrated Rail and

Generation Asia I

Risk-Adjusted Performance

0 of 100

Solid

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.

Integrated Rail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integrated Rail and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Integrated Rail is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Generation Asia and Integrated Rail

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

The idea behind Generation Asia I and Integrated Rail and 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.