Correlation Between Asia Plus and ALT Telecom
Can any of the company-specific risk be diversified away by investing in both Asia Plus and ALT Telecom 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 Plus and ALT Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Plus Group and ALT Telecom Public, you can compare the effects of market volatilities on Asia Plus and ALT Telecom 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 Plus with a short position of ALT Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Plus and ALT Telecom.
Diversification Opportunities for Asia Plus and ALT Telecom
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Asia and ALT is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Asia Plus Group and ALT Telecom Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALT Telecom Public and Asia Plus 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 Plus Group are associated (or correlated) with ALT Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALT Telecom Public has no effect on the direction of Asia Plus i.e., Asia Plus and ALT Telecom go up and down completely randomly.
Pair Corralation between Asia Plus and ALT Telecom
Assuming the 90 days trading horizon Asia Plus Group is expected to under-perform the ALT Telecom. But the stock apears to be less risky and, when comparing its historical volatility, Asia Plus Group is 1.61 times less risky than ALT Telecom. The stock trades about -0.21 of its potential returns per unit of risk. The ALT Telecom Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 112.00 in ALT Telecom Public on August 31, 2024 and sell it today you would earn a total of 1.00 from holding ALT Telecom Public or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asia Plus Group vs. ALT Telecom Public
Performance |
| Timeline |
| Asia Plus Group |
| ALT Telecom Public |
Asia Plus and ALT Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Plus and ALT Telecom
The main advantage of trading using opposite Asia Plus and ALT Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Plus position performs unexpectedly, ALT Telecom 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 ALT Telecom will offset losses from the drop in ALT Telecom's long position.The idea behind Asia Plus Group and ALT Telecom Public pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ALT Telecom vs. AP Public | ALT Telecom vs. Jasmine International Public | ALT Telecom vs. Asia Plus Group | ALT Telecom vs. Bangchak 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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