Correlation Between Asia Biomass and Asset Five

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

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

Diversification Opportunities for Asia Biomass and Asset Five

0.28

Correlation Coefficient

Asia Biomass  Asset Five

Modest diversification

The 3 months correlation between Asia and Asset is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Asia Biomass Public and Asset Five Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asset Five Group and Asia Biomass 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 Asia Biomass Public are associated (or correlated) with Asset Five. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asset Five Group has no effect on the direction of Asia Biomass i.e., Asia Biomass and Asset Five go up and down completely randomly.

Pair Corralation between Asia Biomass and Asset Five

Assuming the 90 days trading horizon Asia Biomass is expected to generate 1.03 times less return on investment than Asset Five. In addition to that, Asia Biomass is 1.0 times more volatile than Asset Five Group. It trades about 0.04 of its total potential returns per unit of risk. Asset Five Group is currently generating about 0.04 per unit of volatility. If you would invest  361.00  in Asset Five Group on September 26, 2024 and sell it today you would lose (109.00) from holding Asset Five Group or give up 30.19% of portfolio value over 90 days.

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

Asia Biomass Public  vs.  Asset Five Group

Asia Biomass Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Biomass Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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.

Pair Trading with Asia Biomass and Asset Five

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

The idea behind Asia Biomass Public and Asset Five Group 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.