Correlation Between Asia Metal and Union Textile

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

Diversification Opportunities for Asia Metal and Union Textile

0.0

Correlation Coefficient

Asia Metal  Union Textile

Pay attention - limited upside

The 3 months correlation between Asia and Union is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Asia Metal Public and Union Textile Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Textile Industries 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 Union Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Textile Industries has no effect on the direction of Asia Metal i.e., Asia Metal and Union Textile go up and down completely randomly.

Pair Corralation between Asia Metal and Union Textile

If you would invest (100.00) in Union Textile Industries on September 18, 2024 and sell it today you would earn a total of  100.00  from holding Union Textile Industries or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Asia Metal Public  vs.  Union Textile Industries

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.

Union Textile Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Union Textile Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Union Textile is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Asia Metal and Union Textile

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

The idea behind Asia Metal Public and Union Textile Industries 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.