Correlation Between Banpu Public and Asia Green

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

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

Diversification Opportunities for Banpu Public and Asia Green

0.83

Correlation Coefficient

Banpu Public  Asia Green

Very poor diversification

The 3 months correlation between Banpu and Asia is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Banpu Public and Asia Green Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Green Energy and Banpu Public 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 Banpu Public are associated (or correlated) with Asia Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Green Energy has no effect on the direction of Banpu Public i.e., Banpu Public and Asia Green go up and down completely randomly.

Pair Corralation between Banpu Public and Asia Green

Assuming the 90 days trading horizon Banpu Public is expected to generate 30.87 times less return on investment than Asia Green. But when comparing it to its historical volatility, Banpu Public is 34.77 times less risky than Asia Green. It trades about 0.09 of its potential returns per unit of risk. Asia Green Energy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  158.00  in Asia Green Energy on September 14, 2024 and sell it today you would lose (29.00) from holding Asia Green Energy or give up 18.35% of portfolio value over 90 days.

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

Banpu Public  vs.  Asia Green Energy

Banpu Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

Asia Green Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Green Energy 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 technical and fundamental 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 Banpu Public and Asia Green

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

The idea behind Banpu Public and Asia Green Energy 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.