Correlation Between Asia Pptys and Grand City

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Can any of the company-specific risk be diversified away by investing in both Asia Pptys and Grand City 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 Pptys and Grand City into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Pptys and Grand City Properties, you can compare the effects of market volatilities on Asia Pptys and Grand City 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 Pptys with a short position of Grand City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Pptys and Grand City.

Diversification Opportunities for Asia Pptys and Grand City

0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Asia and Grand is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Asia Pptys and Grand City Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand City Properties and Asia Pptys 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 Pptys are associated (or correlated) with Grand City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand City Properties has no effect on the direction of Asia Pptys i.e., Asia Pptys and Grand City go up and down completely randomly.

Pair Corralation between Asia Pptys and Grand City

Given the investment horizon of 90 days Asia Pptys is expected to generate 24.69 times more return on investment than Grand City. However, Asia Pptys is 24.69 times more volatile than Grand City Properties. It trades about 0.11 of its potential returns per unit of risk. Grand City Properties is currently generating about -0.29 per unit of risk. If you would invest  5.00  in Asia Pptys on September 24, 2024 and sell it today you would lose (1.20) from holding Asia Pptys or give up 24.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.24%
ValuesDaily Returns

Asia Pptys  vs.  Grand City Properties

 Performance 
       Timeline  
Asia Pptys 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Asia Pptys are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Asia Pptys showed solid returns over the last few months and may actually be approaching a breakup point.
Grand City Properties 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Grand City Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Asia Pptys and Grand City Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Asia Pptys and Grand City

The main advantage of trading using opposite Asia Pptys and Grand City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Pptys position performs unexpectedly, Grand City 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 Grand City will offset losses from the drop in Grand City's long position.
The idea behind Asia Pptys and Grand City Properties 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.
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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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