Correlation Between Asset Five and Singha Estate

Can any of the company-specific risk be diversified away by investing in both Asset Five and Singha Estate 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 Asset Five and Singha Estate into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asset Five Group and Singha Estate Public, you can compare the effects of market volatilities on Asset Five and Singha Estate 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 Asset Five with a short position of Singha Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asset Five and Singha Estate.

Diversification Opportunities for Asset Five and Singha Estate

0.25

Correlation Coefficient

Asset Five  Singha Estate

Modest diversification

The 3 months correlation between Asset and Singha is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Asset Five Group and Singha Estate Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singha Estate Public and Asset Five 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 Asset Five Group are associated (or correlated) with Singha Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singha Estate Public has no effect on the direction of Asset Five i.e., Asset Five and Singha Estate go up and down completely randomly.

Pair Corralation between Asset Five and Singha Estate

Assuming the 90 days horizon Asset Five Group is expected to under-perform the Singha Estate. But the stock apears to be less risky and, when comparing its historical volatility, Asset Five Group is 1.38 times less risky than Singha Estate. The stock trades about -0.19 of its potential returns per unit of risk. The Singha Estate Public is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  88.00  in Singha Estate Public on September 25, 2024 and sell it today you would earn a total of  3.00  from holding Singha Estate Public or generate 3.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Asset Five Group  vs.  Singha Estate Public

Asset Five Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asset Five Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Asset Five is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Singha Estate Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Singha Estate Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Singha Estate disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asset Five and Singha Estate

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

The idea behind Asset Five Group and Singha Estate 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.