Correlation Between Asia Metal and Navakij Insurance

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

By analyzing existing cross correlation between Asia Metal Public and The Navakij Insurance, you can compare the effects of market volatilities on Asia Metal and Navakij Insurance 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 Metal with a short position of Navakij Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Metal and Navakij Insurance.

Diversification Opportunities for Asia Metal and Navakij Insurance

0.47

Correlation Coefficient

Asia Metal  Navakij Insurance

Very weak diversification

The 3 months correlation between Asia and Navakij is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Asia Metal Public and The Navakij Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navakij Insurance and Asia Metal 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 Metal Public are associated (or correlated) with Navakij Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navakij Insurance has no effect on the direction of Asia Metal i.e., Asia Metal and Navakij Insurance go up and down completely randomly.

Pair Corralation between Asia Metal and Navakij Insurance

Assuming the 90 days trading horizon Asia Metal Public is expected to generate 1.0 times more return on investment than Navakij Insurance. However, Asia Metal Public is 1.0 times less risky than Navakij Insurance. It trades about 0.06 of its potential returns per unit of risk. The Navakij Insurance is currently generating about 0.06 per unit of risk. If you would invest  289.00  in Asia Metal Public on September 15, 2024 and sell it today you would lose (9.00) from holding Asia Metal Public or give up 3.11% of portfolio value over 90 days.

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

Asia Metal Public  vs.  The Navakij Insurance

Asia Metal Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Metal Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Navakij Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Navakij Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Navakij Insurance is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Asia Metal and Navakij Insurance

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

The idea behind Asia Metal Public and The Navakij Insurance 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..