Correlation Between Asia Precision and Energy Absolute
Can any of the company-specific risk be diversified away by investing in both Asia Precision and Energy Absolute 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 Energy Absolute 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 Energy Absolute Public, you can compare the effects of market volatilities on Asia Precision and Energy Absolute 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 Energy Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Precision and Energy Absolute.
Diversification Opportunities for Asia Precision and Energy Absolute
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Asia and Energy is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Asia Precision Public and Energy Absolute Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Absolute 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 Energy Absolute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Absolute Public has no effect on the direction of Asia Precision i.e., Asia Precision and Energy Absolute go up and down completely randomly.
Pair Corralation between Asia Precision and Energy Absolute
Assuming the 90 days trading horizon Asia Precision Public is expected to generate 10.17 times more return on investment than Energy Absolute. However, Asia Precision is 10.17 times more volatile than Energy Absolute Public. It trades about 0.06 of its potential returns per unit of risk. Energy Absolute Public is currently generating about -0.1 per unit of risk. If you would invest 372.00 in Asia Precision Public on September 3, 2024 and sell it today you would lose (185.00) from holding Asia Precision Public or give up 49.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.55% |
| Values | Daily Returns |
Asia Precision Public vs. Energy Absolute Public
Performance |
| Timeline |
| Asia Precision Public |
| Energy Absolute Public |
Asia Precision and Energy Absolute Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Precision and Energy Absolute
The main advantage of trading using opposite Asia Precision and Energy Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Precision position performs unexpectedly, Energy Absolute 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 Energy Absolute will offset losses from the drop in Energy Absolute'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 |
| Energy Absolute vs. Gulf Energy Development | Energy Absolute vs. Global Power Synergy | Energy Absolute vs. CP ALL Public | Energy Absolute vs. Bangkok Dusit Medical |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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