Correlation Between Asia Green and Asia Biomass
Can any of the company-specific risk be diversified away by investing in both Asia Green and Asia Biomass 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 Green and Asia Biomass into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Green Energy and Asia Biomass Public, you can compare the effects of market volatilities on Asia Green and Asia Biomass 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 Green with a short position of Asia Biomass. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Green and Asia Biomass.
Diversification Opportunities for Asia Green and Asia Biomass
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Asia and Asia is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Asia Green Energy and Asia Biomass Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Biomass Public and Asia Green 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 Green Energy are associated (or correlated) with Asia Biomass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Biomass Public has no effect on the direction of Asia Green i.e., Asia Green and Asia Biomass go up and down completely randomly.
Pair Corralation between Asia Green and Asia Biomass
Assuming the 90 days trading horizon Asia Green is expected to generate 1.06 times less return on investment than Asia Biomass. But when comparing it to its historical volatility, Asia Green Energy is 1.0 times less risky than Asia Biomass. It trades about 0.04 of its potential returns per unit of risk. Asia Biomass Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 222.00 in Asia Biomass Public on August 27, 2024 and sell it today you would lose (92.00) from holding Asia Biomass Public or give up 41.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asia Green Energy vs. Asia Biomass Public
Performance |
| Timeline |
| Asia Green Energy |
| Asia Biomass Public |
Asia Green and Asia Biomass Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Green and Asia Biomass
The main advantage of trading using opposite Asia Green and Asia Biomass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Green position performs unexpectedly, Asia Biomass 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 Asia Biomass will offset losses from the drop in Asia Biomass' long position.| Asia Green vs. Union Petrochemical Public | Asia Green vs. Eureka Design Public | Asia Green vs. Winner Group Enterprise | Asia Green vs. Ubis Public |
| Asia Biomass vs. Akkhie Prakarn Public | Asia Biomass vs. AIRA Factoring Public | Asia Biomass vs. G Capital Public | Asia Biomass vs. Asia Green Energy |
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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