Correlation Between Asia Plus and Communication System

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

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

Diversification Opportunities for Asia Plus and Communication System

0.5

Correlation Coefficient

Asia Plus  Communication System

Very weak diversification

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

Pair Corralation between Asia Plus and Communication System

Assuming the 90 days trading horizon Asia Plus Group is expected to generate 0.85 times more return on investment than Communication System. However, Asia Plus Group is 1.18 times less risky than Communication System. It trades about 0.22 of its potential returns per unit of risk. Communication System Solution is currently generating about 0.02 per unit of risk. If you would invest  200.00  in Asia Plus Group on May 12, 2025 and sell it today you would earn a total of  38.00  from holding Asia Plus Group or generate 19.0% return on investment over 90 days.

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

Asia Plus Group  vs.  Communication System Solution

Asia Plus Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Plus Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Asia Plus disclosed solid returns over the last few months and may actually be approaching a breakup point.

Communication System

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Communication System Solution are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Communication System is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Asia Plus and Communication System

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

The idea behind Asia Plus Group and Communication System Solution 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.