Correlation Between Ascendas India and Ambase Corp

Can any of the company-specific risk be diversified away by investing in both Ascendas India and Ambase Corp 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 Ascendas India and Ambase Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ascendas India Trust and Ambase Corp, you can compare the effects of market volatilities on Ascendas India and Ambase Corp 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 Ascendas India with a short position of Ambase Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ascendas India and Ambase Corp.

Diversification Opportunities for Ascendas India and Ambase Corp

0.65

Correlation Coefficient

Ascendas India  Ambase Corp

Poor diversification

The 3 months correlation between Ascendas and Ambase is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ascendas India Trust and Ambase Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambase Corp and Ascendas India 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 Ascendas India Trust are associated (or correlated) with Ambase Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambase Corp has no effect on the direction of Ascendas India i.e., Ascendas India and Ambase Corp go up and down completely randomly.

Pair Corralation between Ascendas India and Ambase Corp

Assuming the 90 days horizon Ascendas India Trust is expected to generate 0.61 times more return on investment than Ambase Corp. However, Ascendas India Trust is 1.64 times less risky than Ambase Corp. It trades about -0.06 of its potential returns per unit of risk. Ambase Corp is currently generating about -0.12 per unit of risk. If you would invest  86.00  in Ascendas India Trust on September 14, 2024 and sell it today you would lose (7.00) from holding Ascendas India Trust or give up 8.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Ascendas India Trust  vs.  Ambase Corp

Ascendas India Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ascendas India Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Ambase Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ambase Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Ascendas India and Ambase Corp

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

The idea behind Ascendas India Trust and Ambase Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.