Correlation Between Asara Resources and Retail Food
Can any of the company-specific risk be diversified away by investing in both Asara Resources and Retail Food 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 Asara Resources and Retail Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asara Resources and Retail Food Group, you can compare the effects of market volatilities on Asara Resources and Retail Food 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 Asara Resources with a short position of Retail Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asara Resources and Retail Food.
Diversification Opportunities for Asara Resources and Retail Food
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Asara and Retail is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Asara Resources and Retail Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Food Group and Asara Resources 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 Asara Resources are associated (or correlated) with Retail Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Food Group has no effect on the direction of Asara Resources i.e., Asara Resources and Retail Food go up and down completely randomly.
Pair Corralation between Asara Resources and Retail Food
Assuming the 90 days trading horizon Asara Resources is expected to generate 2.87 times more return on investment than Retail Food. However, Asara Resources is 2.87 times more volatile than Retail Food Group. It trades about 0.07 of its potential returns per unit of risk. Retail Food Group is currently generating about -0.05 per unit of risk. If you would invest 1.60 in Asara Resources on September 24, 2024 and sell it today you would earn a total of 0.30 from holding Asara Resources or generate 18.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Asara Resources vs. Retail Food Group
Performance |
Timeline |
Asara Resources |
Retail Food Group |
Asara Resources and Retail Food Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Asara Resources and Retail Food
The main advantage of trading using opposite Asara Resources and Retail Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asara Resources position performs unexpectedly, Retail Food 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 Retail Food will offset losses from the drop in Retail Food's long position.Asara Resources vs. Energy Resources | Asara Resources vs. 88 Energy | Asara Resources vs. Amani Gold | Asara Resources vs. A1 Investments Resources |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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