Correlation Between Rockworth Public and Asia Aviation

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Can any of the company-specific risk be diversified away by investing in both Rockworth Public and Asia Aviation 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 Rockworth Public and Asia Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rockworth Public and Asia Aviation Public, you can compare the effects of market volatilities on Rockworth Public and Asia Aviation 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 Rockworth Public with a short position of Asia Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rockworth Public and Asia Aviation.

Diversification Opportunities for Rockworth Public and Asia Aviation

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Rockworth and Asia is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Rockworth Public and Asia Aviation Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Aviation Public and Rockworth Public 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 Rockworth Public are associated (or correlated) with Asia Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Aviation Public has no effect on the direction of Rockworth Public i.e., Rockworth Public and Asia Aviation go up and down completely randomly.

Pair Corralation between Rockworth Public and Asia Aviation

Assuming the 90 days trading horizon Rockworth Public is expected to generate 2.83 times more return on investment than Asia Aviation. However, Rockworth Public is 2.83 times more volatile than Asia Aviation Public. It trades about -0.01 of its potential returns per unit of risk. Asia Aviation Public is currently generating about -0.06 per unit of risk. If you would invest  1,060  in Rockworth Public on September 6, 2024 and sell it today you would lose (40.00) from holding Rockworth Public or give up 3.77% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Rockworth Public  vs.  Asia Aviation Public

 Performance 
       Timeline  
Rockworth Public 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Rockworth Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Rockworth Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
Asia Aviation Public 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Asia Aviation Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Asia Aviation disclosed solid returns over the last few months and may actually be approaching a breakup point.

Rockworth Public and Asia Aviation Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Rockworth Public and Asia Aviation

The main advantage of trading using opposite Rockworth Public and Asia Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rockworth Public position performs unexpectedly, Asia Aviation 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 Aviation will offset losses from the drop in Asia Aviation's long position.
The idea behind Rockworth Public and Asia Aviation Public pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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