Correlation Between New Asia and Launch Technologies
Can any of the company-specific risk be diversified away by investing in both New Asia and Launch Technologies 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 Launch Technologies 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 Launch Technologies Co, you can compare the effects of market volatilities on New Asia and Launch Technologies 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 Launch Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Asia and Launch Technologies.
Diversification Opportunities for New Asia and Launch Technologies
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between New and Launch is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding New Asia Construction and Launch Technologies Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Launch Technologies 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 Launch Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Launch Technologies has no effect on the direction of New Asia i.e., New Asia and Launch Technologies go up and down completely randomly.
Pair Corralation between New Asia and Launch Technologies
Assuming the 90 days trading horizon New Asia Construction is expected to generate 2.5 times more return on investment than Launch Technologies. However, New Asia is 2.5 times more volatile than Launch Technologies Co. It trades about 0.12 of its potential returns per unit of risk. Launch Technologies Co is currently generating about -0.18 per unit of risk. If you would invest 1,190 in New Asia Construction on September 14, 2024 and sell it today you would earn a total of 125.00 from holding New Asia Construction or generate 10.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 85.48% |
| Values | Daily Returns |
New Asia Construction vs. Launch Technologies Co
Performance |
| Timeline |
| New Asia Construction |
| Launch Technologies |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
New Asia and Launch Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Asia and Launch Technologies
The main advantage of trading using opposite New Asia and Launch Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Asia position performs unexpectedly, Launch Technologies 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 Launch Technologies will offset losses from the drop in Launch Technologies' 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 |
| Launch Technologies vs. Grand Ocean Retail | Launch Technologies vs. HIM International Music | Launch Technologies vs. Pacific Construction Co | Launch Technologies vs. New Asia Construction |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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