Correlation Between Asia Commercial and APG Securities

Can any of the company-specific risk be diversified away by investing in both Asia Commercial and APG Securities 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 APG Securities 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 APG Securities Joint, you can compare the effects of market volatilities on Asia Commercial and APG Securities 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 APG Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Commercial and APG Securities.

Diversification Opportunities for Asia Commercial and APG Securities

0.51

Correlation Coefficient

Asia Commercial  APG Securities

Very weak diversification

The 3 months correlation between Asia and APG is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Asia Commercial Bank and APG Securities Joint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APG Securities Joint 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 APG Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APG Securities Joint has no effect on the direction of Asia Commercial i.e., Asia Commercial and APG Securities go up and down completely randomly.

Pair Corralation between Asia Commercial and APG Securities

Assuming the 90 days trading horizon Asia Commercial Bank is expected to generate 0.85 times more return on investment than APG Securities. However, Asia Commercial Bank is 1.17 times less risky than APG Securities. It trades about 0.07 of its potential returns per unit of risk. APG Securities Joint is currently generating about -0.01 per unit of risk. If you would invest  1,879,991  in Asia Commercial Bank on September 14, 2024 and sell it today you would earn a total of  650,009  from holding Asia Commercial Bank or generate 34.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.63%
Values	Daily Returns

Asia Commercial Bank  vs.  APG Securities Joint

Asia Commercial Bank

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Commercial Bank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. 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.

APG Securities Joint

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Asia Commercial and APG Securities

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

The idea behind Asia Commercial Bank and APG Securities Joint 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.