Correlation Between Regional Container and Asia Medical

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

By analyzing existing cross correlation between Regional Container Lines and Asia Medical Agricultural, you can compare the effects of market volatilities on Regional Container and Asia Medical 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 Regional Container with a short position of Asia Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Container and Asia Medical.

Diversification Opportunities for Regional Container and Asia Medical

0.46

Correlation Coefficient

Regional Container  Asia Medical

Very weak diversification

The 3 months correlation between Regional and Asia is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Regional Container Lines and Asia Medical Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Medical Agricultural and Regional Container 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 Regional Container Lines are associated (or correlated) with Asia Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Medical Agricultural has no effect on the direction of Regional Container i.e., Regional Container and Asia Medical go up and down completely randomly.

Pair Corralation between Regional Container and Asia Medical

Assuming the 90 days trading horizon Regional Container Lines is expected to generate 1.39 times more return on investment than Asia Medical. However, Regional Container is 1.39 times more volatile than Asia Medical Agricultural. It trades about 0.15 of its potential returns per unit of risk. Asia Medical Agricultural is currently generating about 0.02 per unit of risk. If you would invest  2,188  in Regional Container Lines on September 5, 2024 and sell it today you would earn a total of  687.00  from holding Regional Container Lines or generate 31.4% return on investment over 90 days.

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

Regional Container Lines  vs.  Asia Medical Agricultural

Regional Container Lines

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Regional Container Lines are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Regional Container disclosed solid returns over the last few months and may actually be approaching a breakup point.

Asia Medical Agricultural

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Medical Agricultural are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Asia Medical is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Regional Container and Asia Medical

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

The idea behind Regional Container Lines and Asia Medical Agricultural 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..