Correlation Between Asia Pacific and NYSE Composite
Can any of the company-specific risk be diversified away by investing in both Asia Pacific and NYSE Composite 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 Asia Pacific and NYSE Composite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Pacific Satellite and NYSE Composite, you can compare the effects of market volatilities on Asia Pacific and NYSE Composite 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 Asia Pacific with a short position of NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Pacific and NYSE Composite.
Diversification Opportunities for Asia Pacific and NYSE Composite
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Asia and NYSE is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Asia Pacific Satellite and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite and Asia Pacific 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 Asia Pacific Satellite are associated (or correlated) with NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of Asia Pacific i.e., Asia Pacific and NYSE Composite go up and down completely randomly.
Pair Corralation between Asia Pacific and NYSE Composite
Assuming the 90 days trading horizon Asia Pacific Satellite is expected to generate 5.34 times more return on investment than NYSE Composite. However, Asia Pacific is 5.34 times more volatile than NYSE Composite. It trades about 0.0 of its potential returns per unit of risk. NYSE Composite is currently generating about -0.19 per unit of risk. If you would invest 1,777,000 in Asia Pacific Satellite on February 2, 2024 and sell it today you would lose (27,000) from holding Asia Pacific Satellite or give up 1.52% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
Asia Pacific Satellite vs. NYSE Composite
Performance |
Timeline |
Asia Pacific and NYSE Composite Volatility Contrast
Predicted Return Density |
Returns |
Asia Pacific Satellite
Pair trading matchups for Asia Pacific
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with Asia Pacific and NYSE Composite
The main advantage of trading using opposite Asia Pacific and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Pacific position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.Asia Pacific vs. Alphabet Inc Class A | Asia Pacific vs. Mitra Energi Persada | Asia Pacific vs. Kmw Inc | Asia Pacific vs. Starbucks |
NYSE Composite vs. NI Holdings | NYSE Composite vs. Mattel Inc | NYSE Composite vs. Parker Hannifin | NYSE Composite vs. Artisan Partners Asset |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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