Correlation Between BetaShares Solar and Betashares Asia

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

By analyzing existing cross correlation between BetaShares Solar ETF and Betashares Asia Technology, you can compare the effects of market volatilities on BetaShares Solar and Betashares Asia 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 BetaShares Solar with a short position of Betashares Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Solar and Betashares Asia.

Diversification Opportunities for BetaShares Solar and Betashares Asia

-0.32

Correlation Coefficient

BetaShares Solar  Betashares Asia

Very good diversification

The 3 months correlation between BetaShares and Betashares is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Solar ETF and Betashares Asia Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betashares Asia Tech and BetaShares Solar 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 BetaShares Solar ETF are associated (or correlated) with Betashares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betashares Asia Tech has no effect on the direction of BetaShares Solar i.e., BetaShares Solar and Betashares Asia go up and down completely randomly.

Pair Corralation between BetaShares Solar and Betashares Asia

Assuming the 90 days trading horizon BetaShares Solar ETF is expected to under-perform the Betashares Asia. In addition to that, BetaShares Solar is 1.39 times more volatile than Betashares Asia Technology. It trades about -0.06 of its total potential returns per unit of risk. Betashares Asia Technology is currently generating about 0.1 per unit of volatility. If you would invest  746.00  in Betashares Asia Technology on September 20, 2024 and sell it today you would earn a total of  274.00  from holding Betashares Asia Technology or generate 36.73% return on investment over 90 days.

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

BetaShares Solar ETF  vs.  Betashares Asia Technology

BetaShares Solar ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BetaShares Solar ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Betashares Asia Tech

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Betashares Asia Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Betashares Asia unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BetaShares Solar and Betashares Asia

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

The idea behind BetaShares Solar ETF and Betashares Asia Technology 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.