Correlation Between Land and Asia Plus

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

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

Diversification Opportunities for Land and Asia Plus

0.53

Correlation Coefficient

Land  Asia Plus

Very weak diversification

The 3 months correlation between Land and Asia is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Land and Houses and Asia Plus Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Plus Group and Land 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 Land and Houses are associated (or correlated) with Asia Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Plus Group has no effect on the direction of Land i.e., Land and Asia Plus go up and down completely randomly.

Pair Corralation between Land and Asia Plus

Assuming the 90 days horizon Land and Houses is expected to under-perform the Asia Plus. In addition to that, Land is 1.16 times more volatile than Asia Plus Group. It trades about 0.0 of its total potential returns per unit of risk. Asia Plus Group is currently generating about 0.07 per unit of volatility. If you would invest  228.00  in Asia Plus Group on September 3, 2024 and sell it today you would earn a total of  16.00  from holding Asia Plus Group or generate 7.02% return on investment over 90 days.

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

Land and Houses  vs.  Asia Plus Group

Land and Houses

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Land and Houses has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Land is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Asia Plus Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Plus Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Asia Plus may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Land and Asia Plus

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

The idea behind Land and Houses and Asia Plus Group 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..