Correlation Between Walker Dunlop and Asiaplast Industries

Can any of the company-specific risk be diversified away by investing in both Walker Dunlop and Asiaplast Industries 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 Walker Dunlop and Asiaplast Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walker Dunlop and Asiaplast Industries Tbk, you can compare the effects of market volatilities on Walker Dunlop and Asiaplast Industries 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 Walker Dunlop with a short position of Asiaplast Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and Asiaplast Industries.

Diversification Opportunities for Walker Dunlop and Asiaplast Industries

0.67

Correlation Coefficient

Walker Dunlop  Asiaplast Industries

Poor diversification

The 3 months correlation between Walker and Asiaplast is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Asiaplast Industries Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asiaplast Industries Tbk and Walker Dunlop 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 Walker Dunlop are associated (or correlated) with Asiaplast Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asiaplast Industries Tbk has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Asiaplast Industries go up and down completely randomly.

Pair Corralation between Walker Dunlop and Asiaplast Industries

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the Asiaplast Industries. But the stock apears to be less risky and, when comparing its historical volatility, Walker Dunlop is 1.62 times less risky than Asiaplast Industries. The stock trades about -0.09 of its potential returns per unit of risk. The Asiaplast Industries Tbk is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  54,500  in Asiaplast Industries Tbk on December 30, 2024 and sell it today you would earn a total of  1,500  from holding Asiaplast Industries Tbk or generate 2.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.77%
Values	Daily Returns

Walker Dunlop  vs.  Asiaplast Industries Tbk

Walker Dunlop

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walker Dunlop has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Asiaplast Industries Tbk

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Asiaplast Industries Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Asiaplast Industries is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Walker Dunlop and Asiaplast Industries

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

The idea behind Walker Dunlop and Asiaplast Industries Tbk 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.