Correlation Between Crown Asia and Alliance Global
Can any of the company-specific risk be diversified away by investing in both Crown Asia and Alliance Global 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 Crown Asia and Alliance Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crown Asia Chemicals and Alliance Global Group, you can compare the effects of market volatilities on Crown Asia and Alliance Global 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 Crown Asia with a short position of Alliance Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Asia and Alliance Global.
Diversification Opportunities for Crown Asia and Alliance Global
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Crown and Alliance is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Crown Asia Chemicals and Alliance Global Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Global Group and Crown Asia 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 Crown Asia Chemicals are associated (or correlated) with Alliance Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Global Group has no effect on the direction of Crown Asia i.e., Crown Asia and Alliance Global go up and down completely randomly.
Pair Corralation between Crown Asia and Alliance Global
Assuming the 90 days trading horizon Crown Asia Chemicals is expected to under-perform the Alliance Global. In addition to that, Crown Asia is 1.75 times more volatile than Alliance Global Group. It trades about -0.17 of its total potential returns per unit of risk. Alliance Global Group is currently generating about -0.17 per unit of volatility. If you would invest 921.00 in Alliance Global Group on September 1, 2024 and sell it today you would lose (43.00) from holding Alliance Global Group or give up 4.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Crown Asia Chemicals vs. Alliance Global Group
Performance |
| Timeline |
| Crown Asia Chemicals |
| Alliance Global Group |
Crown Asia and Alliance Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crown Asia and Alliance Global
The main advantage of trading using opposite Crown Asia and Alliance Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Asia position performs unexpectedly, Alliance Global 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 Alliance Global will offset losses from the drop in Alliance Global's long position.| Crown Asia vs. Allhome Corp | Crown Asia vs. LFM Properties Corp | Crown Asia vs. Altus Property Ventures | Crown Asia vs. Monde Nissin Corp |
| Alliance Global vs. GT Capital Holdings | Alliance Global vs. Allhome Corp | Alliance Global vs. Jollibee Foods Corp | Alliance Global vs. LFM Properties Corp |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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