Correlation Between Asahi Kasei and NYSE Composite
Can any of the company-specific risk be diversified away by investing in both Asahi Kasei 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 Asahi Kasei and NYSE Composite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asahi Kasei and NYSE Composite, you can compare the effects of market volatilities on Asahi Kasei 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 Asahi Kasei with a short position of NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asahi Kasei and NYSE Composite.
Diversification Opportunities for Asahi Kasei and NYSE Composite
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Asahi and NYSE is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Asahi Kasei and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite and Asahi Kasei 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 Asahi Kasei 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 Asahi Kasei i.e., Asahi Kasei and NYSE Composite go up and down completely randomly.
Pair Corralation between Asahi Kasei and NYSE Composite
Assuming the 90 days horizon Asahi Kasei is expected to generate 2.89 times more return on investment than NYSE Composite. However, Asahi Kasei is 2.89 times more volatile than NYSE Composite. It trades about -0.03 of its potential returns per unit of risk. NYSE Composite is currently generating about -0.18 per unit of risk. If you would invest 720.00 in Asahi Kasei on January 30, 2024 and sell it today you would lose (10.00) from holding Asahi Kasei or give up 1.39% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Asahi Kasei vs. NYSE Composite
Performance |
Timeline |
Asahi Kasei and NYSE Composite Volatility Contrast
Predicted Return Density |
Returns |
Asahi Kasei
Pair trading matchups for Asahi Kasei
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with Asahi Kasei and NYSE Composite
The main advantage of trading using opposite Asahi Kasei and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asahi Kasei 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.Asahi Kasei vs. Braskem SA Class | Asahi Kasei vs. Lsb Industries | Asahi Kasei vs. Dow Inc | Asahi Kasei vs. Huntsman |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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