Correlation Between Asia Plastic and Basso Industry
Can any of the company-specific risk be diversified away by investing in both Asia Plastic and Basso Industry 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 Plastic and Basso Industry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Plastic Recycling and Basso Industry Corp, you can compare the effects of market volatilities on Asia Plastic and Basso Industry 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 Plastic with a short position of Basso Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Plastic and Basso Industry.
Diversification Opportunities for Asia Plastic and Basso Industry
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Asia and Basso is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Asia Plastic Recycling and Basso Industry Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basso Industry Corp and Asia Plastic 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 Plastic Recycling are associated (or correlated) with Basso Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basso Industry Corp has no effect on the direction of Asia Plastic i.e., Asia Plastic and Basso Industry go up and down completely randomly.
Pair Corralation between Asia Plastic and Basso Industry
Assuming the 90 days trading horizon Asia Plastic is expected to generate 1.3 times less return on investment than Basso Industry. In addition to that, Asia Plastic is 1.43 times more volatile than Basso Industry Corp. It trades about 0.01 of its total potential returns per unit of risk. Basso Industry Corp is currently generating about 0.01 per unit of volatility. If you would invest 4,170 in Basso Industry Corp on September 3, 2024 and sell it today you would earn a total of 100.00 from holding Basso Industry Corp or generate 2.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asia Plastic Recycling vs. Basso Industry Corp
Performance |
| Timeline |
| Asia Plastic Recycling |
| Basso Industry Corp |
Asia Plastic and Basso Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Plastic and Basso Industry
The main advantage of trading using opposite Asia Plastic and Basso Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Plastic position performs unexpectedly, Basso Industry 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 Basso Industry will offset losses from the drop in Basso Industry's long position.| Asia Plastic vs. Victory New Materials | Asia Plastic vs. Hunya Foods Co | Asia Plastic vs. YCC Parts MFG | Asia Plastic vs. Kwong Fong Industries |
| Basso Industry vs. Cheng Shin Rubber | Basso Industry vs. Kung Long Batteries | Basso Industry vs. Pou Chen Corp | Basso Industry vs. China Steel Chemical |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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