Correlation Between Asia Precision and AJ Plast
Can any of the company-specific risk be diversified away by investing in both Asia Precision and AJ Plast 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 Precision and AJ Plast into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Precision Public and AJ Plast Public, you can compare the effects of market volatilities on Asia Precision and AJ Plast 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 Precision with a short position of AJ Plast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Precision and AJ Plast.
Diversification Opportunities for Asia Precision and AJ Plast
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Asia and AJ Plast is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Asia Precision Public and AJ Plast Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AJ Plast Public and Asia Precision 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 Precision Public are associated (or correlated) with AJ Plast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AJ Plast Public has no effect on the direction of Asia Precision i.e., Asia Precision and AJ Plast go up and down completely randomly.
Pair Corralation between Asia Precision and AJ Plast
Assuming the 90 days trading horizon Asia Precision is expected to generate 1.03 times less return on investment than AJ Plast. In addition to that, Asia Precision is 1.0 times more volatile than AJ Plast Public. It trades about 0.06 of its total potential returns per unit of risk. AJ Plast Public is currently generating about 0.06 per unit of volatility. If you would invest 664.00 in AJ Plast Public on September 3, 2024 and sell it today you would lose (184.00) from holding AJ Plast Public or give up 27.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asia Precision Public vs. AJ Plast Public
Performance |
| Timeline |
| Asia Precision Public |
| AJ Plast Public |
Asia Precision and AJ Plast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Precision and AJ Plast
The main advantage of trading using opposite Asia Precision and AJ Plast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Precision position performs unexpectedly, AJ Plast 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 AJ Plast will offset losses from the drop in AJ Plast's long position.| Asia Precision vs. AJ Plast Public | Asia Precision vs. AAPICO Hitech Public | Asia Precision vs. Asian Sea | Asia Precision vs. Alucon Public |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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