Correlation Between Stellar and Asian Pac
Can any of the company-specific risk be diversified away by investing in both Stellar and Asian Pac 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 Stellar and Asian Pac into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellar and Asian Pac Holdings, you can compare the effects of market volatilities on Stellar and Asian Pac 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 Stellar with a short position of Asian Pac. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar and Asian Pac.
Diversification Opportunities for Stellar and Asian Pac
Average diversification
The 3 months correlation between Stellar and Asian is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Asian Pac Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asian Pac Holdings and Stellar 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 Stellar are associated (or correlated) with Asian Pac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asian Pac Holdings has no effect on the direction of Stellar i.e., Stellar and Asian Pac go up and down completely randomly.
Pair Corralation between Stellar and Asian Pac
Assuming the 90 days trading horizon Stellar is expected to generate 2.78 times more return on investment than Asian Pac. However, Stellar is 2.78 times more volatile than Asian Pac Holdings. It trades about 0.19 of its potential returns per unit of risk. Asian Pac Holdings is currently generating about -0.02 per unit of risk. If you would invest 9.16 in Stellar on November 2, 2024 and sell it today you would earn a total of 33.84 from holding Stellar or generate 369.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.26% |
| Values | Daily Returns |
Stellar vs. Asian Pac Holdings
Performance |
| Timeline |
| Stellar |
| Asian Pac Holdings |
Stellar and Asian Pac Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stellar and Asian Pac
The main advantage of trading using opposite Stellar and Asian Pac positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar position performs unexpectedly, Asian Pac 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 Asian Pac will offset losses from the drop in Asian Pac's long position.The idea behind Stellar and Asian Pac Holdings 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.| Asian Pac vs. Bank Islam Malaysia | Asian Pac vs. Sapura Industrial Bhd | Asian Pac vs. Oriental Food Industries | Asian Pac vs. Malayan Banking Bhd |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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