Correlation Between FIC Global and ASRock
Can any of the company-specific risk be diversified away by investing in both FIC Global and ASRock 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 FIC Global and ASRock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIC Global and ASRock Inc, you can compare the effects of market volatilities on FIC Global and ASRock 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 FIC Global with a short position of ASRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIC Global and ASRock.
Diversification Opportunities for FIC Global and ASRock
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FIC and ASRock is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding FIC Global and ASRock Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASRock Inc and FIC Global 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 FIC Global are associated (or correlated) with ASRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASRock Inc has no effect on the direction of FIC Global i.e., FIC Global and ASRock go up and down completely randomly.
Pair Corralation between FIC Global and ASRock
Assuming the 90 days trading horizon FIC Global is expected to generate 5.94 times less return on investment than ASRock. But when comparing it to its historical volatility, FIC Global is 1.11 times less risky than ASRock. It trades about 0.01 of its potential returns per unit of risk. ASRock Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 12,700 in ASRock Inc on August 30, 2024 and sell it today you would earn a total of 10,900 from holding ASRock Inc or generate 85.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIC Global vs. ASRock Inc
Performance |
| Timeline |
| FIC Global |
| ASRock Inc |
FIC Global and ASRock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIC Global and ASRock
The main advantage of trading using opposite FIC Global and ASRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIC Global position performs unexpectedly, ASRock 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 ASRock will offset losses from the drop in ASRock's long position.The idea behind FIC Global and ASRock Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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