Correlation Between Min Aik and Asia Metal

Can any of the company-specific risk be diversified away by investing in both Min Aik and Asia Metal 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 Min Aik and Asia Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Min Aik Technology and Asia Metal Industries, you can compare the effects of market volatilities on Min Aik and Asia Metal 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 Min Aik with a short position of Asia Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Min Aik and Asia Metal.

Diversification Opportunities for Min Aik and Asia Metal

0.07

Correlation Coefficient

Min Aik  Asia Metal

Significant diversification

The 3 months correlation between Min and Asia is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Min Aik Technology and Asia Metal Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Metal Industries and Min Aik 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 Min Aik Technology are associated (or correlated) with Asia Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Metal Industries has no effect on the direction of Min Aik i.e., Min Aik and Asia Metal go up and down completely randomly.

Pair Corralation between Min Aik and Asia Metal

Assuming the 90 days trading horizon Min Aik Technology is expected to under-perform the Asia Metal. But the stock apears to be less risky and, when comparing its historical volatility, Min Aik Technology is 1.19 times less risky than Asia Metal. The stock trades about -0.08 of its potential returns per unit of risk. The Asia Metal Industries is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  7,110  in Asia Metal Industries on August 31, 2024 and sell it today you would earn a total of  1,990  from holding Asia Metal Industries or generate 27.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Min Aik Technology  vs.  Asia Metal Industries

Min Aik Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Min Aik Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Asia Metal Industries

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Metal Industries are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Asia Metal showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Min Aik and Asia Metal

The main advantage of trading using opposite Min Aik and Asia Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Min Aik position performs unexpectedly, Asia Metal 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 Metal will offset losses from the drop in Asia Metal's long position.

The idea behind Min Aik Technology and Asia Metal Industries 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.