Correlation Between POST TELECOMMU and Asia Commercial

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

By analyzing existing cross correlation between POST TELECOMMU and Asia Commercial Bank, you can compare the effects of market volatilities on POST TELECOMMU and Asia Commercial 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 POST TELECOMMU with a short position of Asia Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of POST TELECOMMU and Asia Commercial.

Diversification Opportunities for POST TELECOMMU and Asia Commercial

0.03

Correlation Coefficient

POST TELECOMMU  Asia Commercial

Significant diversification

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

Pair Corralation between POST TELECOMMU and Asia Commercial

Assuming the 90 days trading horizon POST TELECOMMU is expected to under-perform the Asia Commercial. In addition to that, POST TELECOMMU is 2.24 times more volatile than Asia Commercial Bank. It trades about 0.0 of its total potential returns per unit of risk. Asia Commercial Bank is currently generating about 0.05 per unit of volatility. If you would invest  1,574,633  in Asia Commercial Bank on September 21, 2024 and sell it today you would earn a total of  765,367  from holding Asia Commercial Bank or generate 48.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	81.06%
Values	Daily Returns

POST TELECOMMU  vs.  Asia Commercial Bank

POST TELECOMMU

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in POST TELECOMMU are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, POST TELECOMMU may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Asia Commercial Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Commercial Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental drivers remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with POST TELECOMMU and Asia Commercial

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

The idea behind POST TELECOMMU and Asia Commercial Bank 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.