Correlation Between Astar and FIRST SAVINGS
Can any of the company-specific risk be diversified away by investing in both Astar and FIRST SAVINGS 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 Astar and FIRST SAVINGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and FIRST SAVINGS FINL, you can compare the effects of market volatilities on Astar and FIRST SAVINGS 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 Astar with a short position of FIRST SAVINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and FIRST SAVINGS.
Diversification Opportunities for Astar and FIRST SAVINGS
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Astar and FIRST is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Astar and FIRST SAVINGS FINL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST SAVINGS FINL and Astar 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 Astar are associated (or correlated) with FIRST SAVINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST SAVINGS FINL has no effect on the direction of Astar i.e., Astar and FIRST SAVINGS go up and down completely randomly.
Pair Corralation between Astar and FIRST SAVINGS
Assuming the 90 days trading horizon Astar is expected to generate 3.88 times more return on investment than FIRST SAVINGS. However, Astar is 3.88 times more volatile than FIRST SAVINGS FINL. It trades about 0.02 of its potential returns per unit of risk. FIRST SAVINGS FINL is currently generating about 0.04 per unit of risk. If you would invest 6.46 in Astar on October 26, 2024 and sell it today you would lose (1.22) from holding Astar or give up 18.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 59.48% |
| Values | Daily Returns |
Astar vs. FIRST SAVINGS FINL
Performance |
| Timeline |
| Astar |
| FIRST SAVINGS FINL |
Astar and FIRST SAVINGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and FIRST SAVINGS
The main advantage of trading using opposite Astar and FIRST SAVINGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, FIRST SAVINGS 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 FIRST SAVINGS will offset losses from the drop in FIRST SAVINGS's long position.The idea behind Astar and FIRST SAVINGS FINL 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.| FIRST SAVINGS vs. Yanzhou Coal Mining | FIRST SAVINGS vs. Air Transport Services | FIRST SAVINGS vs. ANGLO ASIAN MINING | FIRST SAVINGS vs. AMAG Austria Metall |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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