Correlation Between Asia Commercial and Agriculture Printing

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

Diversification Opportunities for Asia Commercial and Agriculture Printing

-0.28

Correlation Coefficient

Asia Commercial  Agriculture Printing

Very good diversification

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

Pair Corralation between Asia Commercial and Agriculture Printing

Assuming the 90 days trading horizon Asia Commercial Bank is expected to under-perform the Agriculture Printing. But the stock apears to be less risky and, when comparing its historical volatility, Asia Commercial Bank is 1.28 times less risky than Agriculture Printing. The stock trades about -0.02 of its potential returns per unit of risk. The Agriculture Printing and is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  5,390,000  in Agriculture Printing and on September 15, 2024 and sell it today you would earn a total of  90,000  from holding Agriculture Printing and or generate 1.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.69%
Values	Daily Returns

Asia Commercial Bank  vs.  Agriculture Printing and

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.

Agriculture Printing and

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Agriculture Printing and are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Agriculture Printing 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 Agriculture Printing

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

The idea behind Asia Commercial Bank and Agriculture Printing and 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.