Correlation Between Asian Alliance and RB FOOD
Can any of the company-specific risk be diversified away by investing in both Asian Alliance and RB FOOD 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 RB FOOD 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 RB FOOD SUPPLY, you can compare the effects of market volatilities on Asian Alliance and RB FOOD 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 RB FOOD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asian Alliance and RB FOOD.
Diversification Opportunities for Asian Alliance and RB FOOD
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Asian and RBF-R is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Asian Alliance International and RB FOOD SUPPLY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RB FOOD SUPPLY 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 RB FOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RB FOOD SUPPLY has no effect on the direction of Asian Alliance i.e., Asian Alliance and RB FOOD go up and down completely randomly.
Pair Corralation between Asian Alliance and RB FOOD
Assuming the 90 days trading horizon Asian Alliance International is expected to generate 0.67 times more return on investment than RB FOOD. However, Asian Alliance International is 1.5 times less risky than RB FOOD. It trades about 0.09 of its potential returns per unit of risk. RB FOOD SUPPLY is currently generating about -0.02 per unit of risk. If you would invest 358.00 in Asian Alliance International on September 5, 2024 and sell it today you would earn a total of 222.00 from holding Asian Alliance International or generate 62.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asian Alliance International vs. RB FOOD SUPPLY
Performance |
| Timeline |
| Asian Alliance Inter |
| RB FOOD SUPPLY |
Asian Alliance and RB FOOD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asian Alliance and RB FOOD
The main advantage of trading using opposite Asian Alliance and RB FOOD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asian Alliance position performs unexpectedly, RB FOOD 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 RB FOOD will offset losses from the drop in RB FOOD'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 |
| RB FOOD vs. Kingsmen CMTI Public | RB FOOD vs. Hydrotek Public | RB FOOD vs. Karmarts Public | RB FOOD 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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