Correlation Between Nasdaq and Asia Medical

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

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

Diversification Opportunities for Nasdaq and Asia Medical

0.5

Correlation Coefficient

Nasdaq  Asia Medical

Very weak diversification

The 3 months correlation between Nasdaq and Asia is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Asia Medical Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Medical Agricultural and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Asia Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Medical Agricultural has no effect on the direction of Nasdaq i.e., Nasdaq and Asia Medical go up and down completely randomly.

Pair Corralation between Nasdaq and Asia Medical

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.46 times more return on investment than Asia Medical. However, Nasdaq Inc is 2.19 times less risky than Asia Medical. It trades about 0.14 of its potential returns per unit of risk. Asia Medical Agricultural is currently generating about 0.03 per unit of risk. If you would invest  5,318  in Nasdaq Inc on September 15, 2024 and sell it today you would earn a total of  2,694  from holding Nasdaq Inc or generate 50.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.65%
Values	Daily Returns

Nasdaq Inc  vs.  Asia Medical Agricultural

Nasdaq Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Asia Medical Agricultural

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nasdaq and Asia Medical

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

The idea behind Nasdaq Inc and Asia Medical Agricultural 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.