Correlation Between Asia Metal and Azion
Can any of the company-specific risk be diversified away by investing in both Asia Metal and Azion 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 Asia Metal and Azion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Metal Industries and Azion, you can compare the effects of market volatilities on Asia Metal and Azion 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 Asia Metal with a short position of Azion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Metal and Azion.
Diversification Opportunities for Asia Metal and Azion
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Asia and Azion is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Asia Metal Industries and Azion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azion and Asia Metal 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 Asia Metal Industries are associated (or correlated) with Azion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azion has no effect on the direction of Asia Metal i.e., Asia Metal and Azion go up and down completely randomly.
Pair Corralation between Asia Metal and Azion
Assuming the 90 days trading horizon Asia Metal Industries is expected to generate 0.84 times more return on investment than Azion. However, Asia Metal Industries is 1.18 times less risky than Azion. It trades about 0.11 of its potential returns per unit of risk. Azion is currently generating about 0.04 per unit of risk. If you would invest 5,910 in Asia Metal Industries on November 3, 2024 and sell it today you would earn a total of 1,990 from holding Asia Metal Industries or generate 33.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asia Metal Industries vs. Azion
Performance |
| Timeline |
| Asia Metal Industries |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Azion |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Asia Metal and Azion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Metal and Azion
The main advantage of trading using opposite Asia Metal and Azion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Metal position performs unexpectedly, Azion 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 Azion will offset losses from the drop in Azion's long position.The idea behind Asia Metal Industries and Azion 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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