Correlation Between TWOWAY Communications and New Asia
Can any of the company-specific risk be diversified away by investing in both TWOWAY Communications and New Asia 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 TWOWAY Communications and New Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TWOWAY Communications and New Asia Construction, you can compare the effects of market volatilities on TWOWAY Communications and New Asia 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 TWOWAY Communications with a short position of New Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of TWOWAY Communications and New Asia.
Diversification Opportunities for TWOWAY Communications and New Asia
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TWOWAY and New is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding TWOWAY Communications and New Asia Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Asia Construction and TWOWAY Communications 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 TWOWAY Communications are associated (or correlated) with New Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Asia Construction has no effect on the direction of TWOWAY Communications i.e., TWOWAY Communications and New Asia go up and down completely randomly.
Pair Corralation between TWOWAY Communications and New Asia
Assuming the 90 days trading horizon TWOWAY Communications is expected to generate 1.08 times more return on investment than New Asia. However, TWOWAY Communications is 1.08 times more volatile than New Asia Construction. It trades about 0.61 of its potential returns per unit of risk. New Asia Construction is currently generating about 0.45 per unit of risk. If you would invest 6,850 in TWOWAY Communications on October 24, 2024 and sell it today you would earn a total of 5,450 from holding TWOWAY Communications or generate 79.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TWOWAY Communications vs. New Asia Construction
Performance |
| Timeline |
| TWOWAY Communications |
| New Asia Construction |
TWOWAY Communications and New Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TWOWAY Communications and New Asia
The main advantage of trading using opposite TWOWAY Communications and New Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TWOWAY Communications position performs unexpectedly, New Asia 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 New Asia will offset losses from the drop in New Asia's long position.| TWOWAY Communications vs. New Asia Construction | TWOWAY Communications vs. WinMate Communication INC | TWOWAY Communications vs. Da Cin Construction Co | TWOWAY Communications vs. Delpha Construction Co |
| 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 |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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