Correlation Between Asahi Group and Insteel Industries
Can any of the company-specific risk be diversified away by investing in both Asahi Group and Insteel Industries 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 Asahi Group and Insteel Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asahi Group Holdings and Insteel Industries, you can compare the effects of market volatilities on Asahi Group and Insteel Industries 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 Asahi Group with a short position of Insteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asahi Group and Insteel Industries.
Diversification Opportunities for Asahi Group and Insteel Industries
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Asahi and Insteel is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Asahi Group Holdings and Insteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insteel Industries and Asahi Group 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 Asahi Group Holdings are associated (or correlated) with Insteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insteel Industries has no effect on the direction of Asahi Group i.e., Asahi Group and Insteel Industries go up and down completely randomly.
Pair Corralation between Asahi Group and Insteel Industries
Assuming the 90 days horizon Asahi Group is expected to generate 2.06 times less return on investment than Insteel Industries. But when comparing it to its historical volatility, Asahi Group Holdings is 1.35 times less risky than Insteel Industries. It trades about 0.01 of its potential returns per unit of risk. Insteel Industries is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,508 in Insteel Industries on September 3, 2024 and sell it today you would earn a total of 332.00 from holding Insteel Industries or generate 13.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asahi Group Holdings vs. Insteel Industries
Performance |
| Timeline |
| Asahi Group Holdings |
| Insteel Industries |
Asahi Group and Insteel Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asahi Group and Insteel Industries
The main advantage of trading using opposite Asahi Group and Insteel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asahi Group position performs unexpectedly, Insteel Industries 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 Insteel Industries will offset losses from the drop in Insteel Industries' long position.| Asahi Group vs. REVO INSURANCE SPA | Asahi Group vs. Zurich Insurance Group | Asahi Group vs. Direct Line Insurance | Asahi Group vs. Ping An Insurance |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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