Correlation Between Asia Precision and Ditto Public

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

Diversification Opportunities for Asia Precision and Ditto Public

0.45

Correlation Coefficient

Asia Precision  Ditto Public

Very weak diversification

The 3 months correlation between Asia and Ditto is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Asia Precision Public and Ditto Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ditto 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 Ditto Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ditto Public has no effect on the direction of Asia Precision i.e., Asia Precision and Ditto Public go up and down completely randomly.

Pair Corralation between Asia Precision and Ditto Public

Assuming the 90 days trading horizon Asia Precision Public is expected to generate 1.05 times more return on investment than Ditto Public. However, Asia Precision is 1.05 times more volatile than Ditto Public. It trades about -0.02 of its potential returns per unit of risk. Ditto Public is currently generating about -0.05 per unit of risk. If you would invest  200.00  in Asia Precision Public on September 12, 2024 and sell it today you would lose (12.00) from holding Asia Precision Public or give up 6.0% of portfolio value over 90 days.

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

Asia Precision Public  vs.  Ditto 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.

Ditto Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ditto Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Asia Precision and Ditto Public

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

The idea behind Asia Precision Public and Ditto 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.