Correlation Between Asia Precision and Autocorp Holding

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

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

Diversification Opportunities for Asia Precision and Autocorp Holding

0.71

Correlation Coefficient

Asia Precision  Autocorp Holding

Poor diversification

The 3 months correlation between Asia and Autocorp is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Asia Precision Public and Autocorp Holding Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autocorp Holding Public and Asia Precision 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 Precision Public are associated (or correlated) with Autocorp Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autocorp Holding Public has no effect on the direction of Asia Precision i.e., Asia Precision and Autocorp Holding go up and down completely randomly.

Pair Corralation between Asia Precision and Autocorp Holding

Assuming the 90 days trading horizon Asia Precision Public is expected to under-perform the Autocorp Holding. But the stock apears to be less risky and, when comparing its historical volatility, Asia Precision Public is 1.99 times less risky than Autocorp Holding. The stock trades about -0.01 of its potential returns per unit of risk. The Autocorp Holding Public is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  78.00  in Autocorp Holding Public on September 4, 2024 and sell it today you would earn a total of  12.00  from holding Autocorp Holding Public or generate 15.38% return on investment over 90 days.

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

Asia Precision Public  vs.  Autocorp Holding Public

Asia Precision Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

Autocorp Holding Public

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Autocorp Holding Public are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Autocorp Holding disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asia Precision and Autocorp Holding

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

The idea behind Asia Precision Public and Autocorp Holding 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.