Correlation Between Asara Resources and Steamships Trading
Can any of the company-specific risk be diversified away by investing in both Asara Resources and Steamships Trading 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 Asara Resources and Steamships Trading into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asara Resources and Steamships Trading, you can compare the effects of market volatilities on Asara Resources and Steamships Trading 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 Asara Resources with a short position of Steamships Trading. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asara Resources and Steamships Trading.
Diversification Opportunities for Asara Resources and Steamships Trading
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Asara and Steamships is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Asara Resources and Steamships Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steamships Trading and Asara Resources 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 Asara Resources are associated (or correlated) with Steamships Trading. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steamships Trading has no effect on the direction of Asara Resources i.e., Asara Resources and Steamships Trading go up and down completely randomly.
Pair Corralation between Asara Resources and Steamships Trading
Assuming the 90 days trading horizon Asara Resources is expected to generate 20.89 times more return on investment than Steamships Trading. However, Asara Resources is 20.89 times more volatile than Steamships Trading. It trades about 0.1 of its potential returns per unit of risk. Steamships Trading is currently generating about -0.2 per unit of risk. If you would invest 2.00 in Asara Resources on September 12, 2024 and sell it today you would earn a total of 0.20 from holding Asara Resources or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asara Resources vs. Steamships Trading
Performance |
| Timeline |
| Asara Resources |
| Steamships Trading |
Asara Resources and Steamships Trading Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asara Resources and Steamships Trading
The main advantage of trading using opposite Asara Resources and Steamships Trading positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asara Resources position performs unexpectedly, Steamships Trading 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 Steamships Trading will offset losses from the drop in Steamships Trading's long position.| Asara Resources vs. Andean Silver Limited | Asara Resources vs. Aurelia Metals | Asara Resources vs. Neurotech International | Asara Resources vs. Zoom2u Technologies |
| Steamships Trading vs. Red Hill Iron | Steamships Trading vs. K2 Asset Management | Steamships Trading vs. Cleanaway Waste Management | Steamships Trading vs. Hawsons Iron |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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