Correlation Between Direxion Daily and Asia Precision

Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Asia Precision 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 Direxion Daily and Asia Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Direxion Daily Mid and Asia Precision Public, you can compare the effects of market volatilities on Direxion Daily and Asia Precision 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 Direxion Daily with a short position of Asia Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Asia Precision.

Diversification Opportunities for Direxion Daily and Asia Precision

-0.52

Correlation Coefficient

Direxion Daily  Asia Precision

Excellent diversification

The 3 months correlation between Direxion and Asia is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Asia Precision Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Precision Public and Direxion Daily 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 Direxion Daily Mid are associated (or correlated) with Asia Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Precision Public has no effect on the direction of Direxion Daily i.e., Direxion Daily and Asia Precision go up and down completely randomly.

Pair Corralation between Direxion Daily and Asia Precision

Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 0.88 times more return on investment than Asia Precision. However, Direxion Daily Mid is 1.13 times less risky than Asia Precision. It trades about 0.13 of its potential returns per unit of risk. Asia Precision Public is currently generating about -0.03 per unit of risk. If you would invest  5,085  in Direxion Daily Mid on September 13, 2024 and sell it today you would earn a total of  1,183  from holding Direxion Daily Mid or generate 23.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Direxion Daily Mid  vs.  Asia Precision Public

Direxion Daily Mid

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily Mid are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting fundamental indicators, Direxion Daily unveiled solid returns over the last few months and may actually be approaching a breakup point.

Asia Precision Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Precision Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Direxion Daily and Asia Precision

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

The idea behind Direxion Daily Mid and Asia Precision Public 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.