Correlation Between Asia Cement and Asia Polymer
Can any of the company-specific risk be diversified away by investing in both Asia Cement and Asia Polymer 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 Asia Cement and Asia Polymer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Cement Corp and Asia Polymer Corp, you can compare the effects of market volatilities on Asia Cement and Asia Polymer 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 Asia Cement with a short position of Asia Polymer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Cement and Asia Polymer.
Diversification Opportunities for Asia Cement and Asia Polymer
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Asia and Asia is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Asia Cement Corp and Asia Polymer Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Polymer Corp and Asia Cement 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 Asia Cement Corp are associated (or correlated) with Asia Polymer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Polymer Corp has no effect on the direction of Asia Cement i.e., Asia Cement and Asia Polymer go up and down completely randomly.
Pair Corralation between Asia Cement and Asia Polymer
Assuming the 90 days trading horizon Asia Cement Corp is expected to under-perform the Asia Polymer. But the stock apears to be less risky and, when comparing its historical volatility, Asia Cement Corp is 2.97 times less risky than Asia Polymer. The stock trades about -0.4 of its potential returns per unit of risk. The Asia Polymer Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,645 in Asia Polymer Corp on September 1, 2024 and sell it today you would lose (35.00) from holding Asia Polymer Corp or give up 2.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asia Cement Corp vs. Asia Polymer Corp
Performance |
| Timeline |
| Asia Cement Corp |
| Asia Polymer Corp |
Asia Cement and Asia Polymer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Cement and Asia Polymer
The main advantage of trading using opposite Asia Cement and Asia Polymer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Cement position performs unexpectedly, Asia Polymer 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 Polymer will offset losses from the drop in Asia Polymer's long position.| Asia Cement vs. Taiwan Cement Corp | Asia Cement vs. Far Eastern New | Asia Cement vs. Uni President Enterprises Corp | Asia Cement vs. Nan Ya Plastics |
| Asia Polymer vs. USI Corp | Asia Polymer vs. Taiwan Styrene Monomer | Asia Polymer vs. UPC Technology Corp | Asia Polymer vs. Grand Pacific Petrochemical |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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