Correlation Between Transpacific Broadband and Asia United

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

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

Diversification Opportunities for Transpacific Broadband and Asia United

0.27

Correlation Coefficient

Transpacific Broadband  Asia United

Modest diversification

The 3 months correlation between Transpacific and Asia is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Transpacific Broadband Group and Asia United Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia United Bank and Transpacific Broadband 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 Transpacific Broadband Group are associated (or correlated) with Asia United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia United Bank has no effect on the direction of Transpacific Broadband i.e., Transpacific Broadband and Asia United go up and down completely randomly.

Pair Corralation between Transpacific Broadband and Asia United

Assuming the 90 days trading horizon Transpacific Broadband Group is expected to generate 2.53 times more return on investment than Asia United. However, Transpacific Broadband is 2.53 times more volatile than Asia United Bank. It trades about 0.02 of its potential returns per unit of risk. Asia United Bank is currently generating about -0.01 per unit of risk. If you would invest  14.00  in Transpacific Broadband Group on September 21, 2024 and sell it today you would earn a total of  0.00  from holding Transpacific Broadband Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.02%
Values	Daily Returns

Transpacific Broadband Group  vs.  Asia United Bank

Transpacific Broadband

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Transpacific Broadband Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Transpacific Broadband unveiled solid returns over the last few months and may actually be approaching a breakup point.

Asia United Bank

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Asia United Bank are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Asia United exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transpacific Broadband and Asia United

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

The idea behind Transpacific Broadband Group and Asia United 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.

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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.