Correlation Between Rechi Precision and Asia Metal
Can any of the company-specific risk be diversified away by investing in both Rechi Precision and Asia Metal 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 Rechi Precision and Asia Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rechi Precision Co and Asia Metal Industries, you can compare the effects of market volatilities on Rechi Precision and Asia Metal 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 Rechi Precision with a short position of Asia Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rechi Precision and Asia Metal.
Diversification Opportunities for Rechi Precision and Asia Metal
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Rechi and Asia is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Rechi Precision Co and Asia Metal Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Metal Industries and Rechi Precision 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 Rechi Precision Co are associated (or correlated) with Asia Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Metal Industries has no effect on the direction of Rechi Precision i.e., Rechi Precision and Asia Metal go up and down completely randomly.
Pair Corralation between Rechi Precision and Asia Metal
Assuming the 90 days trading horizon Rechi Precision Co is expected to under-perform the Asia Metal. But the stock apears to be less risky and, when comparing its historical volatility, Rechi Precision Co is 1.78 times less risky than Asia Metal. The stock trades about -0.09 of its potential returns per unit of risk. The Asia Metal Industries is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 8,300 in Asia Metal Industries on August 28, 2024 and sell it today you would earn a total of 600.00 from holding Asia Metal Industries or generate 7.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rechi Precision Co vs. Asia Metal Industries
Performance |
| Timeline |
| Rechi Precision |
| Asia Metal Industries |
Rechi Precision and Asia Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rechi Precision and Asia Metal
The main advantage of trading using opposite Rechi Precision and Asia Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rechi Precision position performs unexpectedly, Asia Metal 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 Metal will offset losses from the drop in Asia Metal's long position.| Rechi Precision vs. Basso Industry Corp | Rechi Precision vs. Kinik Co | Rechi Precision vs. Tong Tai Machine Tool | Rechi Precision vs. Cheng Shin Rubber |
| Asia Metal vs. Golden Friends | Asia Metal vs. Sunonwealth Electric Machine | Asia Metal vs. Rechi Precision Co | Asia Metal vs. C Sun Manufacturing |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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