Correlation Between Asia Commercial and An Phat

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

By analyzing existing cross correlation between Asia Commercial Bank and An Phat Plastic, you can compare the effects of market volatilities on Asia Commercial and An Phat 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 Commercial with a short position of An Phat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Commercial and An Phat.

Diversification Opportunities for Asia Commercial and An Phat

0.52

Correlation Coefficient

Asia Commercial  An Phat

Very weak diversification

The 3 months correlation between Asia and AAA is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Asia Commercial Bank and An Phat Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on An Phat Plastic and Asia Commercial 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 Commercial Bank are associated (or correlated) with An Phat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of An Phat Plastic has no effect on the direction of Asia Commercial i.e., Asia Commercial and An Phat go up and down completely randomly.

Pair Corralation between Asia Commercial and An Phat

Assuming the 90 days trading horizon Asia Commercial Bank is expected to under-perform the An Phat. In addition to that, Asia Commercial is 1.6 times more volatile than An Phat Plastic. It trades about -0.1 of its total potential returns per unit of risk. An Phat Plastic is currently generating about 0.22 per unit of volatility. If you would invest  830,000  in An Phat Plastic on September 15, 2024 and sell it today you would earn a total of  42,000  from holding An Phat Plastic or generate 5.06% return on investment over 90 days.

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

Asia Commercial Bank  vs.  An Phat Plastic

Asia Commercial Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Commercial Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, Asia Commercial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

An Phat Plastic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days An Phat Plastic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Asia Commercial and An Phat

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

The idea behind Asia Commercial Bank and An Phat Plastic 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.