Correlation Between MA Financial and Asara Resources
Can any of the company-specific risk be diversified away by investing in both MA Financial and Asara Resources 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 MA Financial and Asara Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MA Financial Group and Asara Resources, you can compare the effects of market volatilities on MA Financial and Asara Resources 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 MA Financial with a short position of Asara Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of MA Financial and Asara Resources.
Diversification Opportunities for MA Financial and Asara Resources
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MAF and Asara is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding MA Financial Group and Asara Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asara Resources and MA Financial 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 MA Financial Group are associated (or correlated) with Asara Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asara Resources has no effect on the direction of MA Financial i.e., MA Financial and Asara Resources go up and down completely randomly.
Pair Corralation between MA Financial and Asara Resources
Assuming the 90 days trading horizon MA Financial is expected to generate 3.56 times less return on investment than Asara Resources. But when comparing it to its historical volatility, MA Financial Group is 3.66 times less risky than Asara Resources. It trades about 0.24 of its potential returns per unit of risk. Asara Resources is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1.90 in Asara Resources on November 8, 2024 and sell it today you would earn a total of 0.70 from holding Asara Resources or generate 36.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MA Financial Group vs. Asara Resources
Performance |
| Timeline |
| MA Financial Group |
| Asara Resources |
MA Financial and Asara Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MA Financial and Asara Resources
The main advantage of trading using opposite MA Financial and Asara Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MA Financial position performs unexpectedly, Asara Resources 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 Asara Resources will offset losses from the drop in Asara Resources' long position.| MA Financial vs. Aspire Mining | MA Financial vs. MFF Capital Investments | MA Financial vs. Alternative Investment Trust | MA Financial vs. Pinnacle Investment Management |
| Asara Resources vs. Maggie Beer Holdings | Asara Resources vs. Centrex Metals | Asara Resources vs. K2 Asset Management | Asara Resources vs. 29Metals |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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