Correlation Between New Asia and Research Solutions
Can any of the company-specific risk be diversified away by investing in both New Asia and Research Solutions 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 New Asia and Research Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Asia Holdings and Research Solutions, you can compare the effects of market volatilities on New Asia and Research Solutions 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 New Asia with a short position of Research Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Asia and Research Solutions.
Diversification Opportunities for New Asia and Research Solutions
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between New and Research is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding New Asia Holdings and Research Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Research Solutions and New 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 New Asia Holdings are associated (or correlated) with Research Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Research Solutions has no effect on the direction of New Asia i.e., New Asia and Research Solutions go up and down completely randomly.
Pair Corralation between New Asia and Research Solutions
Given the investment horizon of 90 days New Asia Holdings is expected to under-perform the Research Solutions. In addition to that, New Asia is 6.65 times more volatile than Research Solutions. It trades about -0.35 of its total potential returns per unit of risk. Research Solutions is currently generating about 0.62 per unit of volatility. If you would invest 260.00 in Research Solutions on September 3, 2024 and sell it today you would earn a total of 87.00 from holding Research Solutions or generate 33.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
New Asia Holdings vs. Research Solutions
Performance |
| Timeline |
| New Asia Holdings |
| Research Solutions |
New Asia and Research Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Asia and Research Solutions
The main advantage of trading using opposite New Asia and Research Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Asia position performs unexpectedly, Research Solutions 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 Research Solutions will offset losses from the drop in Research Solutions' long position.| New Asia vs. Research Solutions | New Asia vs. Red Violet | New Asia vs. Meridianlink | New Asia vs. PDF Solutions |
| Research Solutions vs. Rayont Inc | Research Solutions vs. Shotspotter | Research Solutions vs. Issuer Direct Corp | Research Solutions vs. eGain |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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