Correlation Between Asian Alliance and Chin Huay
Can any of the company-specific risk be diversified away by investing in both Asian Alliance and Chin Huay 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 Asian Alliance and Chin Huay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asian Alliance International and Chin Huay PCL, you can compare the effects of market volatilities on Asian Alliance and Chin Huay 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 Asian Alliance with a short position of Chin Huay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asian Alliance and Chin Huay.
Diversification Opportunities for Asian Alliance and Chin Huay
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Asian and Chin is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Asian Alliance International and Chin Huay PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chin Huay PCL and Asian Alliance 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 Asian Alliance International are associated (or correlated) with Chin Huay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chin Huay PCL has no effect on the direction of Asian Alliance i.e., Asian Alliance and Chin Huay go up and down completely randomly.
Pair Corralation between Asian Alliance and Chin Huay
Assuming the 90 days trading horizon Asian Alliance International is expected to generate 1.02 times more return on investment than Chin Huay. However, Asian Alliance is 1.02 times more volatile than Chin Huay PCL. It trades about -0.12 of its potential returns per unit of risk. Chin Huay PCL is currently generating about -0.35 per unit of risk. If you would invest 615.00 in Asian Alliance International on September 5, 2024 and sell it today you would lose (35.00) from holding Asian Alliance International or give up 5.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Asian Alliance International vs. Chin Huay PCL
Performance |
| Timeline |
| Asian Alliance Inter |
| Chin Huay PCL |
Asian Alliance and Chin Huay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asian Alliance and Chin Huay
The main advantage of trading using opposite Asian Alliance and Chin Huay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asian Alliance position performs unexpectedly, Chin Huay 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 Chin Huay will offset losses from the drop in Chin Huay's long position.| Asian Alliance vs. Kingsmen CMTI Public | Asian Alliance vs. Hydrotek Public | Asian Alliance vs. Karmarts Public | Asian Alliance vs. KC Metalsheet Public |
| Chin Huay vs. Kingsmen CMTI Public | Chin Huay vs. Hydrotek Public | Chin Huay vs. Karmarts Public | Chin Huay vs. KC Metalsheet Public |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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