Correlation Between Asian Insulators and Ai Energy

Can any of the company-specific risk be diversified away by investing in both Asian Insulators and Ai Energy 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 Asian Insulators and Ai Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asian Insulators PCL and Ai Energy Public, you can compare the effects of market volatilities on Asian Insulators and Ai Energy 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 Asian Insulators with a short position of Ai Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asian Insulators and Ai Energy.

Diversification Opportunities for Asian Insulators and Ai Energy

0.66

Correlation Coefficient

Asian Insulators  Ai Energy

Poor diversification

The 3 months correlation between Asian and AIE is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Asian Insulators PCL and Ai Energy Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ai Energy Public and Asian Insulators 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 Asian Insulators PCL are associated (or correlated) with Ai Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ai Energy Public has no effect on the direction of Asian Insulators i.e., Asian Insulators and Ai Energy go up and down completely randomly.

Pair Corralation between Asian Insulators and Ai Energy

Assuming the 90 days horizon Asian Insulators PCL is expected to under-perform the Ai Energy. But the stock apears to be less risky and, when comparing its historical volatility, Asian Insulators PCL is 1.27 times less risky than Ai Energy. The stock trades about -0.27 of its potential returns per unit of risk. The Ai Energy Public is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  110.00  in Ai Energy Public on September 16, 2024 and sell it today you would earn a total of  3.00  from holding Ai Energy Public or generate 2.73% return on investment over 90 days.

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

Asian Insulators PCL  vs.  Ai Energy Public

Asian Insulators PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asian Insulators PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Ai Energy Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ai Energy Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Asian Insulators and Ai Energy

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

The idea behind Asian Insulators PCL and Ai Energy Public 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.