Correlation Between ASOS Plc and ASOS Plc

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

By analyzing existing cross correlation between ASOS plc PK and ASOS Plc, you can compare the effects of market volatilities on ASOS Plc and ASOS Plc 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 ASOS Plc with a short position of ASOS Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASOS Plc and ASOS Plc.

Diversification Opportunities for ASOS Plc and ASOS Plc

-0.75

Correlation Coefficient

ASOS Plc  ASOS Plc

Pay attention - limited upside

The 3 months correlation between ASOS and ASOS is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding ASOS plc PK and ASOS Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASOS Plc and ASOS Plc 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 ASOS plc PK are associated (or correlated) with ASOS Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASOS Plc has no effect on the direction of ASOS Plc i.e., ASOS Plc and ASOS Plc go up and down completely randomly.

Pair Corralation between ASOS Plc and ASOS Plc

Assuming the 90 days horizon ASOS Plc is expected to generate 3.35 times less return on investment than ASOS Plc. But when comparing it to its historical volatility, ASOS plc PK is 1.16 times less risky than ASOS Plc. It trades about 0.0 of its potential returns per unit of risk. ASOS Plc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  636.00  in ASOS Plc on September 8, 2024 and sell it today you would lose (95.00) from holding ASOS Plc or give up 14.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

ASOS plc PK  vs.  ASOS Plc

ASOS plc PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASOS plc PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

ASOS Plc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASOS Plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, ASOS Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASOS Plc and ASOS Plc

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

The idea behind ASOS plc PK and ASOS Plc 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.