Correlation Between Newretail and Asia Electronic
Can any of the company-specific risk be diversified away by investing in both Newretail and Asia Electronic 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 Newretail and Asia Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newretail Co and Asia Electronic Material, you can compare the effects of market volatilities on Newretail and Asia Electronic 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 Newretail with a short position of Asia Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newretail and Asia Electronic.
Diversification Opportunities for Newretail and Asia Electronic
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Newretail and Asia is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Newretail Co and Asia Electronic Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Electronic Material and Newretail 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 Newretail Co are associated (or correlated) with Asia Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Electronic Material has no effect on the direction of Newretail i.e., Newretail and Asia Electronic go up and down completely randomly.
Pair Corralation between Newretail and Asia Electronic
Assuming the 90 days trading horizon Newretail Co is expected to generate 2.16 times more return on investment than Asia Electronic. However, Newretail is 2.16 times more volatile than Asia Electronic Material. It trades about 0.11 of its potential returns per unit of risk. Asia Electronic Material is currently generating about -0.02 per unit of risk. If you would invest 1,480 in Newretail Co on September 3, 2024 and sell it today you would earn a total of 1,000.00 from holding Newretail Co or generate 67.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newretail Co vs. Asia Electronic Material
Performance |
| Timeline |
| Newretail |
| Asia Electronic Material |
Newretail and Asia Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newretail and Asia Electronic
The main advantage of trading using opposite Newretail and Asia Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newretail position performs unexpectedly, Asia Electronic 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 Electronic will offset losses from the drop in Asia Electronic's long position.| Newretail vs. President Chain Store | Newretail vs. Uni President Enterprises Corp | Newretail vs. Taiwan FamilyMart Co | Newretail vs. Eclat Textile Co |
| Asia Electronic vs. Hon Hai Precision | Asia Electronic vs. Delta Electronics | Asia Electronic vs. LARGAN Precision Co | Asia Electronic vs. AU Optronics |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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