Correlation Between LPN Development and ASIA Capital
Can any of the company-specific risk be diversified away by investing in both LPN Development and ASIA Capital 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 LPN Development and ASIA Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LPN Development Public and ASIA Capital Group, you can compare the effects of market volatilities on LPN Development and ASIA Capital 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 LPN Development with a short position of ASIA Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPN Development and ASIA Capital.
Diversification Opportunities for LPN Development and ASIA Capital
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LPN and ASIA is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding LPN Development Public and ASIA Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASIA Capital Group and LPN Development 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 LPN Development Public are associated (or correlated) with ASIA Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASIA Capital Group has no effect on the direction of LPN Development i.e., LPN Development and ASIA Capital go up and down completely randomly.
Pair Corralation between LPN Development and ASIA Capital
Assuming the 90 days trading horizon LPN Development is expected to generate 1.97 times less return on investment than ASIA Capital. But when comparing it to its historical volatility, LPN Development Public is 1.42 times less risky than ASIA Capital. It trades about 0.06 of its potential returns per unit of risk. ASIA Capital Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 33.00 in ASIA Capital Group on September 3, 2024 and sell it today you would lose (33.00) from holding ASIA Capital Group or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.17% |
| Values | Daily Returns |
LPN Development Public vs. ASIA Capital Group
Performance |
| Timeline |
| LPN Development Public |
| ASIA Capital Group |
LPN Development and ASIA Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPN Development and ASIA Capital
The main advantage of trading using opposite LPN Development and ASIA Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPN Development position performs unexpectedly, ASIA Capital 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 ASIA Capital will offset losses from the drop in ASIA Capital's long position.| LPN Development vs. Land and Houses | LPN Development vs. Quality Houses Public | LPN Development vs. AP Public | LPN Development vs. SCB X Public |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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