Correlation Between Asian Sea and Indorama Ventures

Can any of the company-specific risk be diversified away by investing in both Asian Sea and Indorama Ventures 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 Asian Sea and Indorama Ventures into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asian Sea and Indorama Ventures PCL, you can compare the effects of market volatilities on Asian Sea and Indorama Ventures 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 Asian Sea with a short position of Indorama Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asian Sea and Indorama Ventures.

Diversification Opportunities for Asian Sea and Indorama Ventures

-0.25

Correlation Coefficient

Asian Sea  Indorama Ventures

Very good diversification

The 3 months correlation between Asian and Indorama is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Asian Sea and Indorama Ventures PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indorama Ventures PCL and Asian Sea 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 Asian Sea are associated (or correlated) with Indorama Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indorama Ventures PCL has no effect on the direction of Asian Sea i.e., Asian Sea and Indorama Ventures go up and down completely randomly.

Pair Corralation between Asian Sea and Indorama Ventures

Assuming the 90 days trading horizon Asian Sea is expected to under-perform the Indorama Ventures. In addition to that, Asian Sea is 1.03 times more volatile than Indorama Ventures PCL. It trades about -0.02 of its total potential returns per unit of risk. Indorama Ventures PCL is currently generating about 0.09 per unit of volatility. If you would invest  2,374  in Indorama Ventures PCL on September 14, 2024 and sell it today you would earn a total of  226.00  from holding Indorama Ventures PCL or generate 9.52% return on investment over 90 days.

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

Asian Sea  vs.  Indorama Ventures PCL

Asian Sea

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asian Sea has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Asian Sea is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Indorama Ventures PCL

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Indorama Ventures PCL are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Indorama Ventures may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Asian Sea and Indorama Ventures

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

The idea behind Asian Sea and Indorama Ventures PCL 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.