Correlation Between Micro Leasing and ASIA Capital

Can any of the company-specific risk be diversified away by investing in both Micro Leasing and ASIA 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 Micro Leasing and ASIA Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Micro Leasing Public and ASIA Capital Group, you can compare the effects of market volatilities on Micro Leasing and ASIA 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 Micro Leasing with a short position of ASIA Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micro Leasing and ASIA Capital.

Diversification Opportunities for Micro Leasing and ASIA Capital

-0.13

Correlation Coefficient

Micro Leasing  ASIA Capital

Good diversification

The 3 months correlation between Micro and ASIA is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Micro Leasing Public and ASIA Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASIA Capital Group and Micro Leasing 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 Micro Leasing Public are associated (or correlated) with ASIA Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASIA Capital Group has no effect on the direction of Micro Leasing i.e., Micro Leasing and ASIA Capital go up and down completely randomly.

Pair Corralation between Micro Leasing and ASIA Capital

Assuming the 90 days trading horizon Micro Leasing Public is expected to generate 0.11 times more return on investment than ASIA Capital. However, Micro Leasing Public is 9.19 times less risky than ASIA Capital. It trades about -0.25 of its potential returns per unit of risk. ASIA Capital Group is currently generating about -0.24 per unit of risk. If you would invest  118.00  in Micro Leasing Public on September 17, 2024 and sell it today you would lose (14.00) from holding Micro Leasing Public or give up 11.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Micro Leasing Public  vs.  ASIA Capital Group

Micro Leasing Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Micro Leasing Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

ASIA Capital Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASIA Capital Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, ASIA Capital disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Micro Leasing and ASIA Capital

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

The idea behind Micro Leasing Public and ASIA Capital Group 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.