Correlation Between Generation Asia and TransAtlantic Capital

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

Diversification Opportunities for Generation Asia and TransAtlantic Capital

0.0

Correlation Coefficient

Generation Asia  TransAtlantic Capital

Pay attention - limited upside

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

Pair Corralation between Generation Asia and TransAtlantic Capital

If you would invest  0.01  in TransAtlantic Capital on December 24, 2024 and sell it today you would earn a total of  0.00  from holding TransAtlantic Capital or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Generation Asia I  vs.  TransAtlantic Capital

Generation Asia I

Risk-Adjusted Performance

Very Weak

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.

TransAtlantic Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days TransAtlantic Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, TransAtlantic Capital is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Generation Asia and TransAtlantic Capital

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

The idea behind Generation Asia I and TransAtlantic Capital 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.