Correlation Between Exotic Food and Asia Metal
Can any of the company-specific risk be diversified away by investing in both Exotic Food and Asia Metal 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 Exotic Food and Asia Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exotic Food Public and Asia Metal Public, you can compare the effects of market volatilities on Exotic Food and Asia Metal 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 Exotic Food with a short position of Asia Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exotic Food and Asia Metal.
Diversification Opportunities for Exotic Food and Asia Metal
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Exotic and Asia is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Exotic Food Public and Asia Metal Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Metal Public and Exotic Food 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 Exotic Food Public are associated (or correlated) with Asia Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Metal Public has no effect on the direction of Exotic Food i.e., Exotic Food and Asia Metal go up and down completely randomly.
Pair Corralation between Exotic Food and Asia Metal
Assuming the 90 days horizon Exotic Food Public is expected to under-perform the Asia Metal. In addition to that, Exotic Food is 1.33 times more volatile than Asia Metal Public. It trades about -0.24 of its total potential returns per unit of risk. Asia Metal Public is currently generating about -0.16 per unit of volatility. If you would invest 322.00 in Asia Metal Public on September 14, 2024 and sell it today you would lose (38.00) from holding Asia Metal Public or give up 11.8% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Exotic Food Public vs. Asia Metal Public
Performance |
Timeline |
Exotic Food Public |
Asia Metal Public |
Exotic Food and Asia Metal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Exotic Food and Asia Metal
The main advantage of trading using opposite Exotic Food and Asia Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exotic Food position performs unexpectedly, Asia Metal 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 Metal will offset losses from the drop in Asia Metal's long position.Exotic Food vs. Thai Union Group | Exotic Food vs. Thai Union Group | Exotic Food vs. Thai President Foods | Exotic Food vs. Thai Vegetable Oil |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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