Correlation Between Hexa Tradex and Asahi Songwon

Can any of the company-specific risk be diversified away by investing in both Hexa Tradex and Asahi Songwon 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 Hexa Tradex and Asahi Songwon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hexa Tradex Limited and Asahi Songwon Colors, you can compare the effects of market volatilities on Hexa Tradex and Asahi Songwon 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 Hexa Tradex with a short position of Asahi Songwon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hexa Tradex and Asahi Songwon.

Diversification Opportunities for Hexa Tradex and Asahi Songwon

0.22

Correlation Coefficient

Hexa Tradex  Asahi Songwon

Modest diversification

The 3 months correlation between Hexa and Asahi is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Hexa Tradex Limited and Asahi Songwon Colors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asahi Songwon Colors and Hexa Tradex 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 Hexa Tradex Limited are associated (or correlated) with Asahi Songwon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asahi Songwon Colors has no effect on the direction of Hexa Tradex i.e., Hexa Tradex and Asahi Songwon go up and down completely randomly.

Pair Corralation between Hexa Tradex and Asahi Songwon

Assuming the 90 days trading horizon Hexa Tradex Limited is expected to under-perform the Asahi Songwon. But the stock apears to be less risky and, when comparing its historical volatility, Hexa Tradex Limited is 1.12 times less risky than Asahi Songwon. The stock trades about -0.38 of its potential returns per unit of risk. The Asahi Songwon Colors is currently generating about -0.32 of returns per unit of risk over similar time horizon. If you would invest  42,665  in Asahi Songwon Colors on October 11, 2024 and sell it today you would lose (7,070) from holding Asahi Songwon Colors or give up 16.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Hexa Tradex Limited  vs.  Asahi Songwon Colors

Hexa Tradex Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hexa Tradex Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Asahi Songwon Colors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asahi Songwon Colors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Hexa Tradex and Asahi Songwon

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

The idea behind Hexa Tradex Limited and Asahi Songwon Colors 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.