Correlation Between New Asia and Good Finance
Can any of the company-specific risk be diversified away by investing in both New Asia and Good Finance 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 Good Finance 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 Good Finance Securities, you can compare the effects of market volatilities on New Asia and Good Finance 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 Good Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Asia and Good Finance.
Diversification Opportunities for New Asia and Good Finance
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Good is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding New Asia Construction and Good Finance Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Good Finance Securities 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 Good Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Good Finance Securities has no effect on the direction of New Asia i.e., New Asia and Good Finance go up and down completely randomly.
Pair Corralation between New Asia and Good Finance
Assuming the 90 days trading horizon New Asia Construction is expected to generate 2.22 times more return on investment than Good Finance. However, New Asia is 2.22 times more volatile than Good Finance Securities. It trades about 0.21 of its potential returns per unit of risk. Good Finance Securities is currently generating about -0.06 per unit of risk. If you would invest 1,305 in New Asia Construction on October 11, 2024 and sell it today you would earn a total of 150.00 from holding New Asia Construction or generate 11.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
New Asia Construction vs. Good Finance Securities
Performance |
| Timeline |
| New Asia Construction |
| Good Finance Securities |
New Asia and Good Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Asia and Good Finance
The main advantage of trading using opposite New Asia and Good Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Asia position performs unexpectedly, Good Finance 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 Good Finance will offset losses from the drop in Good Finance's long position.| New Asia vs. BES Engineering Co | New Asia vs. Delpha Construction Co | New Asia vs. Cathay Real Estate | New Asia vs. Da Cin Construction Co |
| Good Finance vs. Shanghai Commercial Savings | Good Finance vs. Kuo Yang Construction | Good Finance vs. New Asia Construction | Good Finance vs. International CSRC Investment |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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