Correlation Between New Asia and Roo Hsing
Can any of the company-specific risk be diversified away by investing in both New Asia and Roo Hsing 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 New Asia and Roo Hsing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Asia Construction and Roo Hsing Co, you can compare the effects of market volatilities on New Asia and Roo Hsing 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 New Asia with a short position of Roo Hsing. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Asia and Roo Hsing.
Diversification Opportunities for New Asia and Roo Hsing
Average diversification
The 3 months correlation between New and Roo is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding New Asia Construction and Roo Hsing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roo Hsing and New Asia 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 New Asia Construction are associated (or correlated) with Roo Hsing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roo Hsing has no effect on the direction of New Asia i.e., New Asia and Roo Hsing go up and down completely randomly.
Pair Corralation between New Asia and Roo Hsing
Assuming the 90 days trading horizon New Asia Construction is expected to generate 1.2 times more return on investment than Roo Hsing. However, New Asia is 1.2 times more volatile than Roo Hsing Co. It trades about 0.09 of its potential returns per unit of risk. Roo Hsing Co is currently generating about 0.02 per unit of risk. If you would invest 499.00 in New Asia Construction on September 12, 2024 and sell it today you would earn a total of 806.00 from holding New Asia Construction or generate 161.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Asia Construction vs. Roo Hsing Co
Performance |
| Timeline |
| New Asia Construction |
| Roo Hsing |
New Asia and Roo Hsing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Asia and Roo Hsing
The main advantage of trading using opposite New Asia and Roo Hsing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Asia position performs unexpectedly, Roo Hsing 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 Roo Hsing will offset losses from the drop in Roo Hsing's long position.| New Asia vs. Yang Ming Marine | New Asia vs. Wan Hai Lines | New Asia vs. U Ming Marine Transport | New Asia vs. Taiwan Navigation Co |
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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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