Correlation Between ASIA Capital and G Capital
Can any of the company-specific risk be diversified away by investing in both ASIA Capital and G Capital 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 Capital and G Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASIA Capital Group and G Capital Public, you can compare the effects of market volatilities on ASIA Capital and G Capital 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 Capital with a short position of G Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASIA Capital and G Capital.
Diversification Opportunities for ASIA Capital and G Capital
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ASIA and GCAP is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding ASIA Capital Group and G Capital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G Capital Public and ASIA Capital 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 Capital Group are associated (or correlated) with G Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G Capital Public has no effect on the direction of ASIA Capital i.e., ASIA Capital and G Capital go up and down completely randomly.
Pair Corralation between ASIA Capital and G Capital
Assuming the 90 days trading horizon ASIA Capital Group is expected to generate 1.42 times more return on investment than G Capital. However, ASIA Capital is 1.42 times more volatile than G Capital Public. It trades about 0.08 of its potential returns per unit of risk. G Capital Public is currently generating about 0.06 per unit of risk. If you would invest 33.00 in ASIA Capital Group on August 29, 2024 and sell it today you would lose (33.00) from holding ASIA Capital Group or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.58% |
| Values | Daily Returns |
ASIA Capital Group vs. G Capital Public
Performance |
| Timeline |
| ASIA Capital Group |
| G Capital Public |
ASIA Capital and G Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASIA Capital and G Capital
The main advantage of trading using opposite ASIA Capital and G Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASIA Capital position performs unexpectedly, G Capital 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 G Capital will offset losses from the drop in G Capital's long position.| ASIA Capital vs. Amanah Leasing Public | ASIA Capital vs. Infraset Public | ASIA Capital vs. JMT Network Services |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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