Correlation Between Corporate Office and Asahi Group

Can any of the company-specific risk be diversified away by investing in both Corporate Office and Asahi Group 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 Corporate Office and Asahi Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Corporate Office Properties and Asahi Group Holdings, you can compare the effects of market volatilities on Corporate Office and Asahi Group 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 Corporate Office with a short position of Asahi Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Office and Asahi Group.

Diversification Opportunities for Corporate Office and Asahi Group

0.01

Correlation Coefficient

Corporate Office  Asahi Group

Significant diversification

The 3 months correlation between Corporate and Asahi is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Office Properties and Asahi Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asahi Group Holdings and Corporate Office 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 Corporate Office Properties are associated (or correlated) with Asahi Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asahi Group Holdings has no effect on the direction of Corporate Office i.e., Corporate Office and Asahi Group go up and down completely randomly.

Pair Corralation between Corporate Office and Asahi Group

Assuming the 90 days horizon Corporate Office Properties is expected to generate 0.59 times more return on investment than Asahi Group. However, Corporate Office Properties is 1.69 times less risky than Asahi Group. It trades about -0.07 of its potential returns per unit of risk. Asahi Group Holdings is currently generating about -0.06 per unit of risk. If you would invest  2,931  in Corporate Office Properties on October 23, 2024 and sell it today you would lose (51.00) from holding Corporate Office Properties or give up 1.74% of portfolio value over 90 days.

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

Corporate Office Properties  vs.  Asahi Group Holdings

Corporate Office Pro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corporate Office Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Corporate Office is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Asahi Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asahi Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Asahi Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Corporate Office and Asahi Group

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

The idea behind Corporate Office Properties and Asahi Group Holdings 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.