Correlation Between Asia Precision and Eastern Technical
Can any of the company-specific risk be diversified away by investing in both Asia Precision and Eastern Technical 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 Eastern Technical 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 Eastern Technical Engineering, you can compare the effects of market volatilities on Asia Precision and Eastern Technical 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 Eastern Technical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Precision and Eastern Technical.
Diversification Opportunities for Asia Precision and Eastern Technical
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Asia and Eastern is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Asia Precision Public and Eastern Technical Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Technical 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 Eastern Technical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Technical has no effect on the direction of Asia Precision i.e., Asia Precision and Eastern Technical go up and down completely randomly.
Pair Corralation between Asia Precision and Eastern Technical
Assuming the 90 days trading horizon Asia Precision is expected to generate 1.12 times less return on investment than Eastern Technical. But when comparing it to its historical volatility, Asia Precision Public is 1.0 times less risky than Eastern Technical. It trades about 0.04 of its potential returns per unit of risk. Eastern Technical Engineering is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 92.00 in Eastern Technical Engineering on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Eastern Technical Engineering or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Asia Precision Public vs. Eastern Technical Engineering
Performance |
| Timeline |
| Asia Precision Public |
| Eastern Technical |
Asia Precision and Eastern Technical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Precision and Eastern Technical
The main advantage of trading using opposite Asia Precision and Eastern Technical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Precision position performs unexpectedly, Eastern Technical 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 Eastern Technical will offset losses from the drop in Eastern Technical'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 |
| Eastern Technical vs. G Capital Public | Eastern Technical vs. Harn Engineering Solutions | Eastern Technical vs. Fortune Parts Industry | Eastern Technical vs. Hydrotek Public |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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