Correlation Between Global Health and Asara Resources

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Can any of the company-specific risk be diversified away by investing in both Global Health and Asara Resources 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 Global Health and Asara Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Health and Asara Resources, you can compare the effects of market volatilities on Global Health and Asara Resources 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 Global Health with a short position of Asara Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Health and Asara Resources.

Diversification Opportunities for Global Health and Asara Resources

-0.03
  Correlation Coefficient

Good diversification

The 3 months correlation between Global and Asara is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Global Health and Asara Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asara Resources and Global Health 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 Global Health are associated (or correlated) with Asara Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asara Resources has no effect on the direction of Global Health i.e., Global Health and Asara Resources go up and down completely randomly.

Pair Corralation between Global Health and Asara Resources

Assuming the 90 days trading horizon Global Health is expected to under-perform the Asara Resources. But the stock apears to be less risky and, when comparing its historical volatility, Global Health is 3.77 times less risky than Asara Resources. The stock trades about -0.23 of its potential returns per unit of risk. The Asara Resources is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1.90  in Asara Resources on October 21, 2024 and sell it today you would earn a total of  0.20  from holding Asara Resources or generate 10.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Global Health  vs.  Asara Resources

 Performance 
       Timeline  
Global Health 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Global Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Asara Resources 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Asara Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Global Health and Asara Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Global Health and Asara Resources

The main advantage of trading using opposite Global Health and Asara Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Health position performs unexpectedly, Asara Resources 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 Asara Resources will offset losses from the drop in Asara Resources' long position.
The idea behind Global Health and Asara Resources 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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