Correlation Between Asia Sermkij and Lease IT

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

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

Diversification Opportunities for Asia Sermkij and Lease IT

0.8

Correlation Coefficient

Asia Sermkij  Lease IT

Very poor diversification

The 3 months correlation between Asia and Lease is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Asia Sermkij Leasing and Lease IT Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lease IT Public and Asia Sermkij 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 Sermkij Leasing are associated (or correlated) with Lease IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lease IT Public has no effect on the direction of Asia Sermkij i.e., Asia Sermkij and Lease IT go up and down completely randomly.

Pair Corralation between Asia Sermkij and Lease IT

Assuming the 90 days trading horizon Asia Sermkij Leasing is expected to generate 0.38 times more return on investment than Lease IT. However, Asia Sermkij Leasing is 2.66 times less risky than Lease IT. It trades about -0.12 of its potential returns per unit of risk. Lease IT Public is currently generating about -0.24 per unit of risk. If you would invest  1,060  in Asia Sermkij Leasing on September 28, 2024 and sell it today you would lose (40.00) from holding Asia Sermkij Leasing or give up 3.77% of portfolio value over 90 days.

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

Asia Sermkij Leasing  vs.  Lease IT Public

Asia Sermkij Leasing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Sermkij Leasing 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 forward-looking signals 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.

Lease IT Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lease IT Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic 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.

Pair Trading with Asia Sermkij and Lease IT

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

The idea behind Asia Sermkij Leasing and Lease IT 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.