Correlation Between Asia Pptys and FirstService Corp

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

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

Diversification Opportunities for Asia Pptys and FirstService Corp

-0.66

Correlation Coefficient

Asia Pptys  FirstService Corp

Excellent diversification

The 3 months correlation between Asia and FirstService is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Asia Pptys and FirstService Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstService Corp and Asia Pptys 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 Pptys are associated (or correlated) with FirstService Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstService Corp has no effect on the direction of Asia Pptys i.e., Asia Pptys and FirstService Corp go up and down completely randomly.

Pair Corralation between Asia Pptys and FirstService Corp

Given the investment horizon of 90 days Asia Pptys is expected to generate 14.27 times more return on investment than FirstService Corp. However, Asia Pptys is 14.27 times more volatile than FirstService Corp. It trades about 0.09 of its potential returns per unit of risk. FirstService Corp is currently generating about 0.06 per unit of risk. If you would invest  1.31  in Asia Pptys on August 2, 2024 and sell it today you would earn a total of  5.02  from holding Asia Pptys or generate 383.21% return on investment over 90 days.

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

Asia Pptys  vs.  FirstService Corp

Asia Pptys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Pptys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Asia Pptys is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

FirstService Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FirstService Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, FirstService Corp may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Asia Pptys and FirstService Corp

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

The idea behind Asia Pptys and FirstService Corp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.