Correlation Between Asia United and LFM Properties
Can any of the company-specific risk be diversified away by investing in both Asia United and LFM Properties 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 United and LFM Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia United Bank and LFM Properties Corp, you can compare the effects of market volatilities on Asia United and LFM Properties 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 United with a short position of LFM Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia United and LFM Properties.
Diversification Opportunities for Asia United and LFM Properties
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Asia and LFM is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Asia United Bank and LFM Properties Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LFM Properties Corp and Asia United 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 United Bank are associated (or correlated) with LFM Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LFM Properties Corp has no effect on the direction of Asia United i.e., Asia United and LFM Properties go up and down completely randomly.
Pair Corralation between Asia United and LFM Properties
Assuming the 90 days trading horizon Asia United Bank is expected to generate 0.19 times more return on investment than LFM Properties. However, Asia United Bank is 5.17 times less risky than LFM Properties. It trades about 0.43 of its potential returns per unit of risk. LFM Properties Corp is currently generating about 0.02 per unit of risk. If you would invest 6,275 in Asia United Bank on October 20, 2024 and sell it today you would earn a total of 925.00 from holding Asia United Bank or generate 14.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 55.56% |
| Values | Daily Returns |
Asia United Bank vs. LFM Properties Corp
Performance |
| Timeline |
| Asia United Bank |
| LFM Properties Corp |
Asia United and LFM Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia United and LFM Properties
The main advantage of trading using opposite Asia United and LFM Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia United position performs unexpectedly, LFM Properties 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 LFM Properties will offset losses from the drop in LFM Properties' long position.| Asia United vs. National Reinsurance | Asia United vs. Converge Information Communications | Asia United vs. Security Bank Corp | Asia United vs. Suntrust Home Developers |
| LFM Properties vs. COL Financial Group | LFM Properties vs. Century Pacific Food | LFM Properties vs. Asia United Bank | LFM Properties vs. BDO Unibank |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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